Maize response to fertilizer and fertilizer-use decisions for farmers in Ghana

Current maize yields in Ghana average only one-third of their estimated potential, but this yield gap can be reduced by improving farming practices and growing conditions in Ghana; specifically, yields in Ghana can likely be increased by intensifying the use of fertilizer, other inputs, and irrigation systems. Recently, Ghana introduced a fertilizer subsidy program to help increase fertilizer-use rates, however, little work has been done to examine the effectiveness of this program, or to determine the viability of using fertilizer to increase yields in Ghana. This paper (1) determines the marginal effects of inorganic fertilizer on maize output using OLS and quantile regressions, (2) determines the profitability of fertilizer at the subsidized and unsubsidized prices using the value-cost ratio, and (3) examines alternate instruments for increasing fertilizer use using a linear probability model. I find that fertilizer use has a positive and significant effect on maize yields in all models that I consider; despite this positive correlation, however, I find that fertilizer is not sufficiently profitable for the average Ghanaian farmer to incentivize additional application. Finally, I find that the farmer’s distance from the closest weekly market, whether the farmer has a pre-harvest contract, and whether the farmer has property rights on the field have significant correlations with fertilizer use