Does Farm Diversification Enhance Food and Livelihood Security? Evidence From Smallholder Cocoa Farmers in Ghana

Abstract

ABSTRACT Farm diversification provides alternative sources of income and helps mitigate risks associated with relying solely on one crop. This study investigated the impact of diversification on the welfare of Ghanaian cocoa farmers. Primary data were collected from 403 smallholder cocoa farmers using a multi‐stage sampling technique and analyzed using the endogenous switching regression model. The findings indicate that diversification significantly improved farmers' productivity, household expenditure, asset value, and food security. On average, households engaged in diversification achieved a productivity increase of 0.16 metric tons per acre, an improvement in household expenditure by GHS 1.81, an increase in asset value by GHS 1.42, an improvement of dietary diversity by 0.62 units, and a reduction in food insecurity by 2.36 units. The study recommends that governments and stakeholders invest in programs promoting diversification to help improve smallholder farmers' livelihoods. Such initiatives should include expanding access to high‐yielding seeds, inputs, and extension services, alongside improving farmers' access to affordable credit and tailored financial products. These findings underscore the importance of strengthening access to inputs, credit, and extension services as key enablers of diversification and improved welfare among smallholder farmers.