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SMALL-SCALE  VERSUS  LARGE-SCALE  COCOA  FARMING  IN CAMERO SMALL-SCALE  VERSUS  LARGE-SCALE  COCOA  FARMING  IN CAMERO

SMALL-SCALE VERSUS LARGE-SCALE COCOA FARMING IN CAMERO - PowerPoint Presentation

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SMALL-SCALE VERSUS LARGE-SCALE COCOA FARMING IN CAMERO - PPT Presentation

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

cocoa scale large small scale cocoa small large farm farmers land size expenditures years cfa amp age farms farming cost yield annual

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Slide1

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.Slide15
Slide16

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 !