Drivers of Productivity Growth in Drivers of Productivity Growth in Ghana’s Cocoa SectorGhana’s Cocoa Sector

Marcella VIGNERIMarcella VIGNERIOverseas Development Institute - LondonOverseas Development Institute - London

Ghana Strategy ForumGhana Strategy ForumAccra - November 16, 2007Accra - November 16, 2007

Cocoa SmallholdersCocoa Smallholders

A population of 700,000 earning 57% of their income A population of 700,000 earning 57% of their income from the cash crop from the cash crop

Between 2001 and 2003 total production has doubled Between 2001 and 2003 total production has doubled

But cocoa is a perennial crop: new planting takes But cocoa is a perennial crop: new planting takes

between 3/5 yrs to reach full production.between 3/5 yrs to reach full production.

How has this increase come about? How has this increase come about?

Research findingsResearch findings

Two rounds of a panel Two rounds of a panel survey carried out in survey carried out in 2002 and 2004 on 441 2002 and 2004 on 441 cocoa farmers cocoa farmers (Oxford University) (Oxford University)

Close to the IC border Close to the IC border (W)(W)

Southern BA (away from Southern BA (away from Savanna)Savanna)

Clusters in new (WS) Clusters in new (WS) and traditional (A) and traditional (A) cocoa growing areascocoa growing areas

The factsThe factsGrowth in these data does not mirror the extent of growth Growth in these data does not mirror the extent of growth

observed in the aggregate – 33 percentobserved in the aggregate – 33 percent

Land under cocoa increased by 20 percentLand under cocoa increased by 20 percent

Production per unit of land increased by 8 percentProduction per unit of land increased by 8 percent

Labour supply on cocoa has more than doubled: Labour supply on cocoa has more than doubled: This increase almost entirely driven by household This increase almost entirely driven by household

labourlabour

Fertiliser use has gone up by a factor of 10, and up to four Fertiliser use has gone up by a factor of 10, and up to four times more farmers have used it on their farmstimes more farmers have used it on their farms

Nearly all farms were sprayed in 2003/04 (up from 81 Nearly all farms were sprayed in 2003/04 (up from 81 percent in 2002) percent in 2002)

on average of 4.22 spraying applications on average of 4.22 spraying applications of which 46 percent on carried out by the governmentof which 46 percent on carried out by the government

The role of land The role of land (full bearing tree stock)(full bearing tree stock)

05

001

,000

1,5

00kg

co

coa

/ha

Ashanti Brong Ahafo Western Sefwi Western Wassa

2002 2004 2002 2004 2002 2004 2002 2004

(f.b. tree stock only)Cocoa Yields by Farm Size Quartile - 2001 to 2003

Bottom quartile 2nd quartile3rd quartile Largest quartile

Strong Inverse Relationship -> Smaller farms obtain higher yields, why?

Higher (household) labour use persists

Higher yields observed across all regions

Strong evidence of greater productivity on smaller farms

What do regression results suggest?What do regression results suggest?

Bogyampa, Brong Ahafo: © R. Venugopal 2002

Labour productivity has had a 7 Labour productivity has had a 7 percent increase on cocoa yieldspercent increase on cocoa yields

Higher rates of fertilizer adoption Higher rates of fertilizer adoption increased productivity by 5 percentincreased productivity by 5 percent

Substantial effect of farm sprayingSubstantial effect of farm spraying virtually allvirtually all farms revisited in 2004

reported substantially reducing share of land lost to black podlack pod

Good rainfall spell in months preceding the harvest in 2004 had a bumper effect on yields across all regions

…however…

Regional differences matter volume of production and yields on

full bearing farms increased mainly in Western Sefwi (by means of 2002 young tree stock coming into full bearing)

Policy ImplicationsPolicy Implications

Fertilizer adoption increased production and productivityFertilizer adoption increased production and productivity Spraying exercise (government sponsored and owned) very Spraying exercise (government sponsored and owned) very

effectiveeffective Providing the right incentives to farmers enables to benefit and Providing the right incentives to farmers enables to benefit and

learn from better/best farming practices learn from better/best farming practices

Technology of production remains unchanged: largely based on Technology of production remains unchanged: largely based on use of labour (mostly households’) and land (on the extensive use of labour (mostly households’) and land (on the extensive margin)margin)

Traditional method of production unsustainable: there is not Traditional method of production unsustainable: there is not going to be any forest land to expand further production in new going to be any forest land to expand further production in new areasareas

Need greater incentives to promote replantingNeed greater incentives to promote replanting

Risks from protracting inactionRisks from protracting inaction

ThanksThanks

Ekutuase, Ashanti: © R. Venugopal 2002