By Chi Bemieh Fule August 6 2013 THESIS PRESENTATION Outline of todays presentation Justification of the study Problem statement Hypotheses Conceptual framework Research ID: 188003
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SMALL-SCALE VERSUS LARGE-SCALE COCOA FARMING IN CAMEROON
ByChi Bemieh FuleAugust 6, 2013
THESIS PRESENTATION Slide2
Outline of today’s presentation
Justification of the studyProblem statementHypothesesConceptual frameworkResearch methodology
Results Conclusion
Recommendations Future researchSlide3
1. Justification of the studyIn 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 programmeHowever some discriminative land policies among others favour large-scale farming.Slide4
Cont’dCameroon 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 farmsIn 2006, gov’t targeted to raise annual production from 137,000t to 300,000t in 2015.Slide5
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 ???Slide6
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 StatementSlide7
3. Purpose of the studyCompare the economic performances of small-scale and large-scale cocoa farmers’ both at the level of production and marketing.Slide8
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. Slide9
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 Slide10
Assuming CRS techn. & 2 Input - 1 Output1 Input - 1 Output case
Figure 1. Technical & Allocative eff.Figure 2. Scale efficiency
Conventional methods: SFA, DEA, OLS, MPMSlide11
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, Slide12
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.Slide13
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 produceSlide14
6. Research methodology
Figure 3. Map of the Nyong & Mfoumou Division of the Centre Region of Cameroon, Central AfricaPrimary 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 201340 valid questionnaires administered.Slide15Slide16
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
Fig 2. Input expenditure shares Slide17
Farmer characteristics according to Their categories
VariablesSmall-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)Slide18
Only household size was observed to be statistically significantly different across farmer categories (99% CI)
F
ig
3
. The input shares in total expenditures based on farm categoriesSlide19
Farm yieldLevel 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)Slide20
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.Slide21
Marketing strategyMost small-scale farmers prefer to sell their cocoa individuallyMost large-scale farmers practise group selling, and are board members of the FOs
Large-scale farmers have higher selling prices than small-scale farmersSlide22
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)Slide23
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 expendituresSlide24
recommendationsPromoting 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 farmsSlide25
Future studiesSampling technique to include new entrantsCollecting more accurate (& quantitative
) dataPerforming more rigorous economic analysis, (NPV, efficiency measurement…)Investigate the sustainability of cocoa production in CameroonSlide26
Thank You !