Nontariff measures and production allocation decisions of cereal farmers in Ghana

Abstract

Using exogenous variation in trade shocks, this study examines the association between nontariff measures and cereal production allocation decisions among commercial farmers in Ghana. We study nontariff measures from both an extensive (experience of nontariff measures) and an intensive (cost of nontariff measures) perspective using a sample of 455 cereal farmers in Ghana. We employ the seemingly (un)related regression (SURE) and the inverse probability weighting with regression adjustment (IPWRA) to estimate the effect of nontariff measures on production allocation decisions. The result shows that nontariff measures are associated with lower cereal production and intensity of cereal commercialization but positively associated with the consumption of cereals. The results are robust after controlling for potential endogeneity using the Lewbel 2SLS. In addition, we find that our results are not likely to be driven by unobserved heterogeneity. We find evidence of consistent and robust estimates of nontariff measures when the IPWRA model is applied and compared to the SURE estimates. Overall, our study shows that nontariff measures can be a depressive pathway to cereal sustainable production and commercialization with associated policy implications for economic development [EconLit Citations: F1, F13, E23, Q13].