Profitability and cost-effectiveness of cowpea seed production and delivery systems: Evidence from Nigeria and Ghana

Abstract

Seed systems are critical to agricultural development in sub-Saharan Africa, where smallholder farmers rely on quality seeds to boost productivity, enhance food security, and increase income generation. Despite extensive research on seed systems, there is limited empirical evidence on the profitability of different legume seed production models, particularly how investment returns respond to potential price and yield shocks, and the cost-effectiveness of various seed delivery channels in West Africa. Using data from multiple actors in cowpea seed systems, this study assesses and compares the profitability of seed production under formal, semi-formal, and informal producers, as well as the cost-effectiveness of different seed delivery channels in Ghana and Nigeria. Our results show that while the formal seed production model involves higher investment costs, it also yields greater returns, on average, in terms of net revenues, contribution margin, and benefit–cost ratio, GH₵12,400 (1205 USD/ha), 66% and 2.9, respectively, in Ghana, and ₦1,127,000 (713 USD/ha), 63% and 2.7, respectively, in Nigeria. In contrast, the semi-formal and informal producers require lower capital outlay, yet they generate reasonable returns, on average, underscoring the complementary role of these models. Results also show that profitability varies across countries. In Ghana, formal, semi-formal, and informal producers outperformed their counterparts in Nigeria, highlighting the importance of country-specific context. Beyond average returns, we find that all production models are sensitive to seed price and yield fluctuations. Lastly, our results show that along the dimensions of per-farmer delivery cost and delivery cost per kilogram of seed, agrodealers appear to be among the most cost-effective in Nigeria, while community-based seed marketing appears to be the most cost-effective in Ghana. Overall, findings highlight policy opportunities to enhance cowpea seed production and distribution systems, towards ensuring that quality seeds are available, affordable, and accessible to smallholder farmers.