Transcript RESEARCH PROPOSAL

THESIS PRESENTATION
SMALL-SCALE VERSUS LARGESCALE COCOA FARMING IN
CAMEROON
By
Chi Bemieh Fule
August 6, 2013
OUTLINE OF TODAY’S PRESENTATION
1.
2.
3.
4.
5.
6.
7.
8.
9.
Justification of the study
Problem statement
Hypotheses
Conceptual framework
Research methodology
Results
Conclusion
Recommendations
Future research
1. JUSTIFICATION OF THE STUDY
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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
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

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 ???

2. PROBLEM STATEMENT
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
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?
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. HYPOTHESES
1.
2.
3.
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.
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
Figure 1. Technical & Allocative eff.
Assuming CRS techn. & 2 Input - 1 Output
Figure 2. Scale efficiency
1 Input - 1 Output case
Conventional methods: SFA, DEA, OLS, MPM
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
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,...
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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)
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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 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

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
Fig 1. Total Physical Product (kg)
Table 1. Variables described
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)
14000.00
12000.00
10000.00
8000.00
Y
6000.00
4000.00
2000.00
20.00
12.00
11.00
7.00
6.50
6.00
5.50
5.00
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.00
0.25
Age (years)
Mean
Output (kilograms)
Variable
16000.00
Fig 2. Input expenditure shares
FARMER CHARACTERISTICS ACCORDING TO THEIR CATEGORIES
Variables
Small-scale
Medium-scale
Large-scale
(0.25 – 2.00 ha)
(2.50 – 4.00 ha)
(5.00 – 20.00 ha)
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)
Age of farmer (years)
Fig 3. The input shares in total expenditures based on farm categories
60%
51%
50%
40%
39%
36%
27%
30%
22%
20%
17%
15%
20%
17%
13%
14%
13%
8%
10%
9%
0%
0%
Small-scale
Medium-scale
Land
Labour
Phyto
Plt.mat.
Large-scale
Equipt
Only household size was observed to be statistically
significantly different across farmer categories (99% CI)
FARM YIELD
Regression results on log (yield)
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
-0.0145132
0.325452
0.96474
1.03996
0.395928
0.01363
-0.498213
1.86785
0.79156
l_Experience
l_hhsize
l_age
Level of education and household size are
relevant for land productivity (HC1 std errors).
**
**
AVERAGE COST [18€, 1850 €] Μ = 152 €
Regression results on log (average cost)
Coefficient
Std. Error
p-value
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
*
const
*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)
***
MARKETING STRATEGY
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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
Regression results on log (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
-1.18032
0.184918
<0.00001
-0.0236435
0.0369574
0.52704
l_Plt_Mat_
l_Phyto
Household size and experience in cocoa farming are
determining factors for farmers’ profit margins as well
as expenditures on land and planting materials
***
**
***
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 smallscale 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
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THANK YOU !