Abstract:
Output price risk has been a perennial challenge to cassava farmers due
to their inability to foresee and quantify the level of risk associated with the
price of their produce. It was against this background that the study analysed
output price risk of cassava in the Volta region of Ghana. Primary data were
collected from 500 sampled cassava farmers using structured interview
schedule and analysed using descriptive statistics whilst secondary data were
analysed using procedures such as historical value-at-risk, cointegration and
standard regression analysis.
The results indicated that Cassava price increases significantly over
times with high level of volatility between each period. Additionally, cassava
farmers face the risk of losing Gh¢1.35 per 91kg at 95% confidence level,
representing about 31% (Gh¢179millions ) of their annual revenues Inflation
and exchange rate significantly determine the price of cassava while cassava
yield, inflation and exchange rate are significant determinants of cassava price
volatility. Crop diversification, off-farm business, varying harvesting time, and
reduce farm size were the major risk management strategies used by the
farmers in the study area while lack of readily available market, poor
processing facilities, land tenure system, insufficient fund, and imperfect
information regarding price changes were the major constraints facing farmers'
in adapting to output price risk. Based on the finding of the study, it is
recommended that policies stabilizing inflation, exchange rate, establishment
of price controls, designing output risk insurance, and training farmers in
value addition will help address the challenge.
