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SMALL-SCALE VERSUS LARGE-SCALE COCOA FARMING IN CAMEROON

THESIS PRESENTATION . By Chi Bemieh Fule August 6, 2013. SMALL-SCALE VERSUS LARGE-SCALE COCOA FARMING IN CAMEROON. Outline of today’s presentation. Justification of the study Problem statement Hypotheses Conceptual framework Research methodology Results Conclusion

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SMALL-SCALE VERSUS LARGE-SCALE COCOA FARMING IN CAMEROON

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  1. THESIS PRESENTATION By Chi BemiehFule August 6, 2013 SMALL-SCALE VERSUS LARGE-SCALE COCOA FARMING IN CAMEROON

  2. Outlineoftoday’s presentation • Justification of the study • Problem statement • Hypotheses • Conceptualframework • Research methodology • Results • Conclusion • Recommendations • Future research

  3. 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.

  4. 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.

  5. 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 tosmall farmers ???

  6. 2. Problem Statement • 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?

  7. 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.

  8. 4. Hypotheses • Small-scale farms have higher yield compared to large-scale farms. • Small-scale farmers have a cost advantage over large-scale farmers. • Small-scale farms are more profitable to operate than large-scale farms.

  9. 5. Conceptualframework • 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

  10. Figure 1. Technical & Allocative eff. Figure 2. Scale efficiency Assuming CRS techn. & 2 Input - 1 Output 1 Input - 1 Output case Conventional methods: SFA, DEA, OLS, MPM

  11. 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,

  12. 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.

  13. Marketing strategies Channel by which cocoa beans are conveyed to the market (group selling or individual) Reasons for the choice of channel Knowledge about prevailing market price Effective selling price of farmer’s produce

  14. 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.

  15. 7. results Table 1. Variables described Fig 2. Input expenditure shares

  16. Farmer characteristics according to Their categories

  17. Fig 3. The input shares in total expenditures based on farm categories Only household size was observed to be statistically significantly different across farmer categories (99% CI)

  18. Farm yield Regression results on log (yield) Level of education and household size are relevant for land productivity (HC1 std errors).

  19. Average cost [18€, 1850 €] µ = 152 € Regression results on log (average cost) *opportunity costs of land and labour are zero. Expenditures on labour, phytosanitary products, planting material and farm equipment are relevant for explaining input costs (HC1 std errors)

  20. 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

  21. profitability Regression results on log (profitability) Household size and experience in cocoa farming are determining factors for farmers’ profit margins as well as expenditures on land and planting materials

  22. 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

  23. 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

  24. 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

  25. Thank You !

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