Agricultural policy and commodity price stabilisation in Ghana: The role of buffer stockholding operations

Abstract

This paper investigates the extent of price volatility of maize and rice in Ghana following the introduction of public buffer stockholding operations (PBSO) as a policy to stabilise farm output prices in the last decade. We analysed price volatility using the generalised autoregressive conditional heteroscedasticity (GARCH(1,1)) modelling technique. This econometric technique was applied to market-level time-series data from selected major markets in Ghana from 2006 to 2015. The results indicate that price volatility for maize and rice has declined in the long run and, in the short run, shows relatively slow volatility transmission. The findings show that the buffer stockholding operations policy in the selected markets has stabilised the prices of the two commodities, especially in the long run. The results suggest that buffer stockholding operation policy remains a viable alternative for curbing high price volatility if structured well to fit the country context. We also conclude that climate change resilience measures are needed to be integrated into the agriculture and food systems of the country if we want to address the persistent price volatility of maize and rice in Ghana sustainably.