Crop diversification improves technical efficiency and reduces income variability in Northern Ghana

Crop diversification has been shown to help mitigate climate change effects for farmers. While previous research shows that crop diversification may increase or decrease technical efficiency in different regions, research on whether crop diversification involves a tradeoff between technical efficiency and income variability is limited. Using agricultural production data from Northern Ghana, this study uses the stochastic input distance function to examine the effects of crop diversification on technical efficiency. The study further explores effects of crop diversification on income variability using an ordinary least square regression to understand the nexus between technical efficiency and income variability in crop diversification. The results show evidence against a ‘tradeoff’ between technical efficiency and income stability for farmers in Northern Ghana. We find that crop diversification significantly improves efficiency and reduces income variability in Northern Ghana, so farmers do not have to give up efficiency for income stability or vice versa. This suggests that crop diversification could be an ideal Climate Smart Agricultural (CSA) strategy for promoting agricultural growth and resilience in Northern Ghana. While our data has a maximum of three crops, which could limit generalization of results to farmers who grow more than three crops, our results make a novel contribution to the literature on crop diversification.