Household-specific food price differentials and high-value crop production in rural Ghana

- Household-specific food price differentials and high-value crop production.
- Cropland share allocation to high-value crops decreases with increasing price band.
- High-value crop promoting policies may fail under high market transactions cost.
- Improving rural infrastructure could promote responsiveness to price incentives.

Using panel data from Ghana we have examined the relationship between household-specific producer-consumer price differentials and rural household cropland allocation between food and high-value crops. We test the hypothesis that cereal price bands induce a shift of resources away from high-value crop production, making smallholders appear unresponsive to price incentives. Our results lend support to this hypothesis, implying that a policy aiming at increasing farmers' income through high-value crop production may fail if hard and soft infrastructure does not improve in rural areas, and if staple crop productivity does not increase significantly.