The Effect of Off-farm Investment on Tomato Productivity: The Case of Irrigated Tomato in Northern Region

Abstract

There had been a growing recognition among rural households regarding the importance of income diversification in poverty reduction. This article sort to contribute to the discourse by examining the variables that explain the reasons why households participate in Off-farm investment and how this affect farm productivity using a sample of 400 irrigated tomato households in the Northern Region of Ghana. Methodologically, an endogenous switching regression model was used to simultaneously assess the determinants of Off-farm investment participation and the effect it has on farm productivity. The results revealed that household socioeconomic such as: age, household size and years in tomato production influenced tomato productivity of both participants and non-participants of Off-farm differently while institutional factors like input credit, fertilizer subsidy, training, extension access and irrigation also influence productivity of participants and non-participants. The treatment effect revealed that Off-farm investment has negative impact on farm productivity. Based on the findings we conclude that farmers’ decision to make investment outside the farm does not lead to high tomato productivity due to the fact that revenue from Off-farm was not invested on the farm but was rather used to take care of households’ expenditure needs and payment of borrowed funds. We therefore recommend that, the district Ministry of Food and Agriculture outfit should assist farmers to form a credit union that could support farmers in purchasing farm inputs like fertilizers, improved seeds, herbicides, insecticides and labour to improve farm productivity.