The role of social capital in adoption of risky versus less risky subsidized input supplies: An empirical study of cocoa farmers in Ghana

Summary

This study evaluates the effect of social capital on farmers’ adoption of subsidized seedlings and fertilizer for cocoa farmers in Ghana. We distinguish three types of social capital: network social capital, relationship social capital, and community social capital. Network social capital refers to the peer-to-peer information flow about product benefits reaching farmers, therefore closing the information asymmetry that prevents farmers from social learning about crop risk management through inputs adoption. Relationship social capital considers the role of social status in getting facilitated access to inputs through connections with extension officers who facilitate information dissemination about input benefits, and moreover potentially help bypass the government criteria in getting access to inputs themselves. Finally, community social capital concerns the community collective income, community size and reachability relative to the cooperative main office.

We find that network social capital has a significant effect on adoption of subsidized seedlings, to an extent where it allows farmers to bypass subsidy qualification criteria for access to seedlings imposed by the government. This applies even more so for group and village leaders. Subsidized fertilizer uptake, on the other hand, is less dependent on social capital. We argue that this difference results from the risk involved in adopting seedlings versus fertilizer. In the case of seedlings adoption, relying on information provided by the social network promotes sharing of benefits of hybrid varieties, and thus reduces the risk of its application. Adoption of fertilizer, on the other hand, is not correlated with social capital because fertilizer application is less risky to farmers. They can easily switch from using fertilizer to not using fertilizer. Access to both inputs is influenced by government inputs’ eligibility criteria, namely having mapped farm. However, we find that 15% and 29% of farmers respectively have access to seedlings and fertilizer, even though their farms are not mapped. Our findings suggest that for governments to stimulate uptake of substantive inputs, such as seedlings, subsidies should coincide with attention to social capital and fair distribution of inputs.