This study examines how behind-the-border non-tariff measures (NTMs) affect the agricultural transaction costs and profitability of commercial cereal farmers in Ghana. Despite the growing importance of NTMs in international trade, empirical evidence on their effects remains mixed, with some studies suggesting that they facilitate trade by improving standards and market access, while others highlight their cost-increasing and trade-restrictive effects. In addition, most existing studies rely on aggregate trade data, leaving limited micro-level evidence on how behind-the-border NTMs affect producers, particularly commercial farmers in developing countries.
This study explores NTMs from both an extensive and intensive perspective using data from 455 commercial cereal farmers across five regions in Ghana. Employing ordinary least squares regression and instrumental variable (IV) techniques, the analysis assesses the association between NTMs, agricultural transaction costs and farm profitability.
The results reveal that customs formalities are the most frequently encountered NTMs. Commercial farmers who incurred NTMs conducted approximately 2.7 more cereal transactions per production season and faced an increase in compliance costs of GHS 2,533 (USD 346) per production season. In contrast, NTMs were associated with a reduction in produce perishability by 0.27 per production season and a decrease in profit of GHS 1,696 (USD 232) per production season. These outcomes persist even after controlling for potential endogeneity. The findings underscore that while NTMs may facilitate trade volume, they also raise compliance costs and reduce profitability, potentially constraining sustainable cereal production.
The use of cross-sectional data limits our ability to fully establish causality. Future research could benefit from using panel data to explore the dynamic effects of NTMs to improve the depth of findings. Additionally, combining survey-based measures of compliance costs with official NTM data from sources such as the UNCTAD database could provide a more comprehensive understanding of how NTMs affect both domestic producers and international trade flows.
While most studies on non-tariff measures in developing countries focus on the macroeconomic level, this study examines the behind-the-border (i.e. within domestic markets) non-tariff measures that commercial farmers face, offering insights from a microeconomic perspective on their effects.
