Economic efficiency of cocoa production in Ghana

Abstract

The main purpose of this study was to analyze the economic efficiency of resource utilization in cocoa production among cocoa farmers in Ghana to provide information for effective application and management of farm input on cocoa farms. A random sample of 300 farmers was selected in six cocoa growing districts in Ghana using the multi-stage sampling approach. Individual farmers were interviewed with the help of a standard structured questionnaire. Descriptive and inferential analyses of the survey data were performed. The mean age of the farmers was 51.5 years. The educational status of the farmers was low as the majority (52.0%) had middle school education and 21.5% of them were illiterates. The magnitude of the parameter estimates from the Cobb-Douglass production function of household size, cocoa farm size, insecticides, fungicides and fertilizer were 0.261, 0.514, 0.273, 0.09 and 0.325 respectively. The quantity of fertilizer applied to the cocoa farm had the highest marginal physical product (133.11 kg/bag), followed by cocoa farm size (126.31 kg/ha), the quantity of insecticides was 30.49 kg/litre, household size (22.46 kg/person) and finally, the quantity of fungicides (1.39 kg/sachet). Household size, farm size, insecticide, fungicide and fertilizer used were found to have statistically significant (p< 0.05) impact on cocoa production. The allocative efficiency analysis of the cross-sectional data on farm resources indicated that there was inefficiency in the management of resources in cocoa
cultivation by cocoa farmers since household size, insecticides, fungicides and fertilizer were underutilized and farm size over utilized. Farmers are advised to increase the use of household labour by spending more hours on the farm or increasing the number of adult family members helping on the farm, insecticides, fungicides, and fertilizer while reducing the use of land through intensive farming to ensure resource use efficiency in cocoa production.

Key words: cocoa, production function, efficiency, Ghana.