Date of Graduation

5-2013

Document Type

Thesis

Degree Name

Bachelor of Science in Agricultural, Food and Life Sciences

Degree Level

Undergraduate

Department

Agricultural Economics and Agribusiness

Advisor/Mentor

Nalley, Lawton L.

Committee Member/Reader

Dixon, Bruce L.

Committee Member/Second Reader

Rom, Curt R.

Committee Member/Third Reader

Popp, Jennie

Abstract

While billions of dollars flow into low-income countries each year to help alleviate poverty, assessing the effectiveness of these dollars is a challenging task. The literature is rich in studies that measure the benefits of rural development programs. However, many of these studies lack a temporal dimension because they measure cost and benefits for only capital investments and for only a single, static year, while not accounting for skill enhancement. By only measuring net producer benefits during the life of the development program, the cost-benefit analyses (CBA) may not truly capture the full net benefits of a given program. In 2009, the World Cocoa Foundation (WCF) undertook the Cocoa Livelihoods Program (CLP) in conjunction with the Bill and Melinda Gates Foundation and sixteen member companies involved in the chocolate, cocoa, and coffee industries. The goal of CLP is to increase cocoa production and thereby strengthen the economies of cocoa-growing communities. CLP operates production, financial, and input management training and credit programs to help accomplish its goals. Using primary 2010-2011 production data collected in Ghana, the goal of this study was to estimate the change in net present value (NPV) associated with CLP training over a 50-year period (two cocoa tree life cycles), assuming that producers can utilize what they have learned from the CLP training well after the course is completed. Using multiple regression analyses to determine the effect of CLP on increasing yield, and therefore increasing NPV, it was determined that average cocoa yield increased 75.24% per hectare after completing CLP training resulting in a NPV increase of $401.00 per hectare annually or a 90% increase in annual profit. Given that it costs WCF $252 to train each participant, this would equate to a benefit-cost ratio (BCR) of 79.56:1, or $79.56 dollars in additional cocoa producer profit for every one dollar WCF invests into poverty reduction, which is a large return based on any measure. This would indicate that CLP is helping to increase incomes for the poorest of the poor. Unlike other studies that typically only estimate benefits for the life of the program, this study assumed that the human capital obtained in the CLP training program could be used well after the program’s termination, thus giving a more accurate estimation of the true benefits of the CLP program. In Ghana, where approximately 52% of the population lives on USD $2 a day or less ($730.00 annually), 27% live on $1.25 or less per day ($456.25 annually), and 19% of rural households produce cocoa, studies like this can be used by development NGOs to illustrate the potential of skill attainment in alleviating poverty, ideally producing more opportunities for citizens of low-income countries to lift themselves out of poverty and contribute to the global economy.

Keywords

poverty; cocoa production; Ghana; WCF; CLP

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