Examining drivers of technical, allocative and economic efficiencies in cocoa farming: empirical evidence from Ghana.

Abstract

In Ghana, cocoa production is a major economic activity among rural farmers. Its production contributes significantly to the GDP and further, livelihood security enhancement among rural folks. However, recent development has unveiled a situation of persistent low farm-level productivity among cocoa farmers which threatens their livelihood security. In view of this, we estimated the economic, technical, and allocative efficiencies among cocoa farmers and their determinants to help proffer relevant policy strategies to arrest the situation of low farm-level productivity. Using a multistage sampling procedure, we collected data from 750 cocoa farmers across the cocoa-growing regions of Ghana. To estimate the farm-level efficiency scores, we employed the stochastic frontier analysis and our results show that cocoa farmers generally exhibited significant levels of technical, allocative, and economic inefficiencies. We estimated the average technical, allocative, and economic efficiencies scores among the cocoa farmers to be 67%, 69%, and 51% respectively. The analysis of the determinants of technical, allocative, and economic inefficiencies revealed that farmer and farm-specific variables such as sex, household size, educational level, years of farming experience, frequency of extension contact, quality of extension received, use of climate smart adaptation technologies, farm size, farm labour and access to credit facilities significantly explain cocoa farm level efficiencies. Accordingly, we recommend that extension service providers and COCOBOD develop strategies to improve upon the quality of extension service delivery as well as incorporate the promotion and adoption of climate smart adaptation technologies into its productivity enhancement programmes for farmers.