Comparative advantage and factors affecting maize production in Northern Ghana: A Policy Analysis Matrix Study

Maize is one of the most important crops produced and consumed in Ghana, accounting for 58% of local cereal production. Increasing food prices worldwide and the gap between production and consumption of maize in recent years in Ghana present the country with growing import bills and higher prices for consumers. The purpose of this study was to analyze whether farmers in the northern sector of Ghana have a comparative advantage in the production of maize as import substitution. The effect impact of the fertilizer subsidy program on the yield itself and consequently on the private and social profitability has been tested. Fertilizer subsidy programs are one of the most popular policy programs in Africa. In the mid-90s many countries introduced them to increase crops yield. Household survey data of the cropping season 2010 were collected and complemented with data from different institutions. We applied the Policy Analysis Matrix (PAM), to assess policy effects on production systems, and the Cobb-Douglas production function to identify factors affecting the output of each system. The results suggest that production systems with yields above the national average of 1.5 Mt/ha are profitable at private level and contribute to growth of the national economy. Farming systems producing below this threshold report negative social profits, implying that they do not use scarce resources efficiently in the production of maize and depend on government intervention. Policy implications are drown and, in conclusion, we consider essential to combine single policy tools and used in synergy to realize the full efficiency of each.