Large-scale private investors, fertilizer use and farm performance in Ghana

Purpose This research investigates the impact of large-scale private investors (LSPIs) on fertilizer use and farm performance, focusing on how LSPIs' presence and interactions with smallholder rice farmers influence fertilizer adoption, yields and net returns in Ghana. Design/methodology/approach Using a two-round survey of smallholder rice farmers, the analysis applies a correlated random effects model and a control function approach to address potential endogeneity and unobserved heterogeneity in the estimation of LSPIs' effects. Findings The presence of LSPIs reduces the likelihood of adopting NPK 15-15-15 by 8.6% while increasing adoption of advanced NPK formulations by 1.5%. Training and advice provided by LSPIs are associated with a 199.5% increase in rice yields, which rises to 205.6% when combined with machinery rental services. However, the gains in net returns diminish once machinery rental costs are factored in. Research limitations/implications The findings highlight the importance of complementing LSPIs' investments with training programs and the provision of machinery services. Originality/value This research contributes to the literature by disentangling the effects of LSPIs' mere presence from their active engagement with smallholders. It underscores that the potential of LSPIs for agricultural development depends on their provision of knowledge and services rather than their existence alone.