Factors Influencing Risk in Per Capita Income from Food Crop Production in Ghana

Abstract

Risk and uncertainty are ubiquitous and varied within the agricultural sector. This study investigated how weather risk in agriculture impact real per capita income from food crop production. An econometric model to estimate a stochastic production function that quantifies the effects of risk variables on the mean, variance and skewness of real per capita income was adopted. The results showed that average temperature has a significant concave relationship on real per capita income, indicating that rising average temperature increases real per capita income but the increase in real per capita income diminishes as average temperature increases above a maximum threshold of 27.78°C. Precipitation on the other hand does not have any significant effect on real per capita income on the average.