The Impact of Quality-Based Pricing Scheme on Local Paddy Transactions in the Northern Region of Ghana

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Abstract

<p>To meet increasing demand of urban consumers for rice, the improvement of local rice quality is urgent in Sub-Saharan Africa. In 2014 a quality-based pricing scheme for purchasing paddy was introduced by a large-scale rice milling plant in the Northern region of Ghana. Does it have any impact on the quality of local rice? Applying 2SLS to 1,054 paddy transactions data collected around the plant, this study reveals that the introduction of this grading system has indirect effects on local paddy transactions: some farmers adopt transactions with quality consideration and get higher prices in selling paddy to local traders.</p>

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