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SMALL-SCALE VERSUS LARGE-SCALE COCOA FARMING IN CAMEROON
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Transcript of SMALL-SCALE VERSUS LARGE-SCALE COCOA FARMING IN CAMEROON
SMALL-SCALE VERSUS LARGE-SCALE COCOA FARMING IN CAMEROON
ByChi Bemieh Fule
August 6, 2013
THESIS PRESENTATION
OUTLINE OF TODAY’S PRESENTATION
1. Justification of the study2. Problem statement3. Hypotheses4. Conceptual framework5. Research methodology6. Results 7. Conclusion8. Recommendations 9. Future research
1. JUSTIFICATION OF THE STUDY In 2005, smallholdings were home to 450 million
households (2 billion people). This population constitutes 92% of the 1.1 billion
”dollar-poor”. Since 2000, more attention was paid to
smallholders to achieve sustainable growth and development in Africa eg. via the CAADP programme
However some discriminative land policies among others favour large-scale farming.
CONT’D Cameroon is fifth world cocoa producer; cocoa
contributes to 6% of GDP; CMR 2000 survey: employs 260,000 farm
families; 1-3 ha mean farm size; low yield of 300kg/ha; mean age of trees = 40 years; low maintenance of cocoa farms
In 2006, gov’t targeted to raise annual production from 137,000t to 300,000t in 2015.
Strategy: Identify, multiply & distribute improved cocoa breeds; organize farmers into cooperatives and ease their access to land, credit & technical assistance; etc
In 2011, it was alleged that the revitalization program encouraged large-scale farming (esp. elites) at the expense of already existing small cocoa farmers….
Opportunity or threat to small farmers ???
According to economic theory, small-scale farming is more efficient than large-scale farming when using constant returns to scale technologies (manual labour) in the presence of high transaction costs.
What economic rationale could explain the expansion of cocoa farmlands?
2. PROBLEM STATEMENT
3. PURPOSE OF THE STUDY
Compare the economic performances of small-scale and large-scale cocoa farmers’ both at the level of
production and marketing.
4. HYPOTHESES1. Small-scale farms have higher yield compared to
large-scale farms.2. Small-scale farmers have a cost advantage over
large-scale farmers.3. Small-scale farms are more profitable to operate
than large-scale farms.
5. CONCEPTUAL FRAMEWORK
The economics of farm size (Eastwood et al., 2008)HH with heterogeneous endowment in K & L, (relative prices of inputs, land tenancy, level of development & techno), end up having different farm sizes.
The efficient farm size increases with HH size in the presence of transaction costs
Assuming CRS techn. & 2 Input - 1 Output 1 Input - 1 Output case
Figure 1. Technical & Allocative eff. Figure 2. Scale efficiency
Conventional methods: SFA, DEA, OLS, MPM
Farm yield or land productivity (kilograms per hectare)
Factors affecting yield
Treeage= mean age of cocoa trees (years)Density= planting density of cocoa trees (trees/ ha)V= socioeconomic variables like age of farmer, level
of educ, HH size,...
Average Cost per hectare (CFA F per hectare)
= expenditures in CFA F, while k stands for wages, equipment, fertilizers, and land,
Profitability (revenue-cost ratio)
Factors affecting profitability
Labour = annual expenditures on the wages (CFA F)Land = annual expenditures on land (CFA F)Phyto = annual expenditures on phytosanitary products (CFA F)Plt.mat = annual expenditures on planting materials (CFA F)Equipt = annual expenditures on farm equipment (CFA F)The betas are the parameters to be estimated while ε is the stochastic term.
Marketing strategiesChannel by which cocoa beans are conveyed
to the market (group selling or individual)Reasons for the choice of channelKnowledge about prevailing market price Effective selling price of farmer’s produce
6. RESEARCH METHODOLOGY Figure 3. Map of the Nyong &
Mfoumou Division of the Centre Region of Cameroon, Central Africa
Primary data from cocoa farmers in Nyong and Mfoumou Division of the Centre Region of Cameroon.
Selective and Simple Random Sampling Technique
Field survey carried out in March 2013
40 valid questionnaires administered.
7. RESULTS
Variable Mean Age (years) 51.8 (10.3)Education (years)
7.0 (6.0)
Experience (years)
15.5 (16.4)
Farm size (hectares)
4.17 (3.71)
Tree age (years)
31.24 (22.35)
Table 1. Variables described
0.251.001.502.002.503.003.504.004.505.005.506.006.507.0011.0012.0020.00
0.00
2000.00
4000.00
6000.00
8000.00
10000.00
12000.00
14000.00
16000.00
Fig 1. Total Physical Product (kg)
Y
Out
put (
kilo
gram
s)Fig 2. Input expenditure shares
FARMER CHARACTERISTICS ACCORDING TO THEIR CATEGORIESVariables Small-scale
(0.25 – 2.00 ha)
Medium-scale
(2.50 – 4.00 ha)
Large-scale
(5.00 – 20.00 ha)
Age of farmer (years) 48.7 (9.1) 52,7 (12,63) 54,5 (9,48)
Household size 5 (1.87) 5 (3,25) 11 (9,16)
Education (years) 7 (4.0) 8 (4,47) 9 (6,06)
Experience (years) 10 (9,7) 15,5 (15,5) 21,28 (21,31)
Training 8 (53.3%) 7 (63.6%) 12 (85.7%)
Actual farm size in production (ha) 1.35 (0.51) 3.41 (0.73) 7.78 (4.10)
Total cocoa farm size (ha) 2.55 (1.63) 5.00 (2.50) 10.00 (6.14)
Average age of trees (years) 27.9 (21.03) 29.2 (25.9) 36.4 (21.4)
Planting density (no. plants per ha) 1392 (224.92) 1301 (426.11) 1193 (153.76)
Group selling price (CFA F/ Kg) 877.5 (431.7) 995.0(506.4) 917.5(432.3)
Individual selling price (CFA F/ Kg) 735.7 (405.8) 818.7 (414.2) 856.0 (403.7)
Only household size was observed to be statistically significantly different across farmer categories (99% CI)
Fig 3. The input shares in total expenditures based on farm categories
Small-scale Medium-scale Large-scale0%
10%
20%
30%
40%
50%
60%
0%
39%
13%15% 17%
51%
36%
17%20%
27%
13%
8%
22%
14%
9%
Land Labour Phyto Plt.mat. Equipt
FARM YIELD
Level of education and household size are relevant for land productivity (HC1 std errors).
Coefficient Std. Error p-value
const -4.29903 11.9003 0.72053
l_Density 1.65251 1.19265 0.17644
l_Treeage -0.244049 0.446709 0.58902
l_educ -1.16899 0.475912 0.02026 **
l_Experience -0.0145132 0.325452 0.96474
l_hhsize 1.03996 0.395928 0.01363 **
l_age -0.498213 1.86785 0.79156
Regression results on log (yield)
AVERAGE COST [18€, 1850 €] Μ = 152 €
Coefficient Std. Error p-value
const 13.8692 2.02192 <0.00001 ***
l_Experience -0.173126 0.160324 0.28854
training -0.159916 0.202236 0.43510
l_age -0.488222 0.517584 0.35284
l_hhsize 0.124108 0.14745 0.40641
l_Labour 0.092612 0.0229418 0.00033 ***
l_Phyto 0.084074 0.0187951 0.00010 ***
l_Plt_Mat_ -0.400155 0.127252 0.00365 ***
l_Equipt 0.211434 0.113475 0.07192 *
Expenditures on labour, phytosanitary products, planting material and farm equipment are relevant for explaining input costs (HC1 std errors)
Regression results on log (average cost)
*opportunity costs of land and labour are zero.
MARKETING STRATEGY Most small-scale farmers prefer to sell their
cocoa individually
Most large-scale farmers practise group selling, and are board members of the FOs
Large-scale farmers have higher selling prices than small-scale farmers
PROFITABILITY
Coefficient Std. Error p-value
const 9.31224 1.70189 <0.00001 ***
l_hhsize 0.76261 0.271582 0.00855 ***
l_educ -0.167719 0.187382 0.37765
l_Experience 0.819697 0.235292 0.00150 ***
l_Treeage 0.12904 0.220397 0.56246
l_Land -0.118475 0.0497362 0.02354 **
l_Labour -0.0616811 0.0375119 0.11022
l_Plt_Mat_ -1.18032 0.184918 <0.00001 ***
l_Phyto -0.0236435 0.0369574 0.52704
Household size and experience in cocoa farming are determining factors for farmers’ profit margins as well as expenditures on land and planting materials
Regression results on log (profitability)
8. CONCLUSION cocoa farming in N-M is still being practised by
indigens, who responded to the policy incentive by extending their cocoa farms.
High yield of small-scale farms is explained by the higher productivity of family labour
None has a cost advantage Large-scale farmers have more entrepreneurial
skills. But the high prices they attract causes a spillover effect to the benefit of other members & free-riders
Small-scale farms are more profitable, based on their actual expenditures
RECOMMENDATIONS
Promoting the co-existence of both farmer categories, given their characteristics would benefit the small-scale farmers more.
There is a risk of misallocation (inefficient use) of resources for large-scale farms
FUTURE STUDIES Sampling technique to include new entrants Collecting more accurate (& quantitative)
data Performing more rigorous economic analysis,
(NPV, efficiency measurement…) Investigate the sustainability of cocoa
production in Cameroon
THANK YOU !