Assessing the performance of regional soybean prices in Ghana

Abstract

Soybean production has been widely promoted in sub-Saharan Africa as a means of improving rural household income. Numerous studies point to poor adoption levels, low yield levels, and limited profitability among smallholder farmers. Poor performance of soybean among smallholders generates numerous hypotheses as to the root causes. One logical cause is low prices, which result from anecdotes from the field, especially among producers and policymakers. In this study, the first of its kind that we are aware of, analyzes regional soybean prices over time across six key growing and commercial regions of Ghana. We employ cointegration and multivariate vector error correction model to measure the level of international and inter-market integration and performance. The results show regional and international integration as well as Granger Causality results consistent with the local supply-demand context. Specifically, the international market Granger causes Kumasi, Bolgatanga, and Wa markets, while the Tamale and Kumasi, serve as the leading production and demand markets, respectively. The results of the study provide evidence that prices do perform well in Ghana and are not a major source of weak adoption and low levels of profitability among smallholder soybean farmers.