By. Chi . Bemieh. . Fule. August 6, 2013. THESIS PRESENTATION . Outline. . of. . today’s. 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
Outline of today’s presentation
Justification of the study
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.Slide4
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.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
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
) in the presence of high transaction costs.What economic rationale could explain the expansion of cocoa farmlands?
2. Problem StatementSlide7
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.Slide8
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 costsSlide10
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, MPMSlide11
Farm yield or land productivity (kilograms per hectare) Factors affecting yieldTreeage= 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 profitabilityLabour = 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 Africa
Primary data from cocoa farmers in
Division of the Centre Region of Cameroon.
Selective and Simple Random Sampling Technique
Field survey carried out in March 2013
40 valid questionnaires administered.Slide15Slide16
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 sharesSlide17
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 size5 (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)
Total cocoa farm size (ha)
Average age of trees (years)
Planting density (no. plants per ha)
Group selling price (CFA F/ Kg)
Individual selling price (CFA F/ Kg)
Only household size was observed to be statistically significantly different across farmer categories (99% CI)
3. The input shares in total expenditures based on farm categoriesSlide19
Level of education and household size are relevant for land productivity (HC1 std errors).
Regression results on log (yield)Slide20
Average cost [18€, 1850 €] µ = 152 €
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
Most small-scale farmers prefer to sell their cocoa individually
Most large-scale farmers
group selling, and are board members of the FOs
Large-scale farmers have higher selling prices than small-scale farmersSlide22
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
cocoa farming in N-M is still being
, 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
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
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 farmsSlide25
Sampling 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 !