Date of Graduation

7-2015

Document Type

Thesis

Degree Name

Master of Science in Agricultural Economics (MS)

Degree Level

Graduate

Department

Agricultural Economics and Agribusiness

Advisor/Mentor

Lawton L. Nalley

Committee Member

Bruce L. Dixon

Second Committee Member

Jennie S. Popp

Third Committee Member

Jeff Luckstead

Keywords

Social sciences, Cocoa, Farm household model, Farmer field schools, Ghana, Spillover effects, Sub-saharan africa

Abstract

This thesis consists of two studies analyzing the first phase of the Cocoa Livelihood Program (CLP-I), a current World Cocoa Foundation (WCF) development project, sponsored by the Bill and Melinda Gates Foundation and aimed at improving the livelihood of small scale cocoa producers in Sub-Saharan Africa. The first study uses a difference-in-differences econometric model to estimate yield enhancements attributable to farmer field schools which CLP implements. The results show a 32%, 34%, 50% and 62% increase in cocoa yield for Ghana, Côte d’Ivoire, Nigeria and Cameroon, respectively. These yield enhancements have the potential to increase income by 26%, 29%, 48%, and 87% for cocoa farmers in Ghana, Côte d’Ivoire, Nigeria and Cameroon, respectively. The benefit-cost ratios of the program are estimated to range from US $18- US $62. Building on the results from the econometric analysis, the second study develops a Farm Household Model to analyze the direct cocoa market and indirect spillover effects of CLP and demand expansion on equilibrium price and quantities in the Ghanaian food and cocoa markets, and welfare. The results show that net welfare gains are higher for CLP households relative to non-CLP households. The spillover effects in the maize, cassava, and yam markets are minimal while the rice market experiences a modest increase in its price. The net welfare for Ghana and the world are both positive. Sensitivity analysis shows that cocoa price declines as the CLP participation rate increases and rises as world cocoa demand expands. Also, at a CLP participation rate greater than 59%, net gains from the program in Ghana become negative due to a declining cocoa price as supply increases. Based on these results, CLP could be expanded from its current rate of 6.25% of cocoa farmers to 59%. However without demand expansion, expanding CLP participation beyond 59%, will lead to welfare losses in Ghana. Hence, marketing and cocoa demand expansion are equally as important as production expansion to increase rural farm household income. Hence, marketing and cocoa demand expansion are equally as important as production expansion to increase rural farm household income. Given the expected increase in world cocoa demand, this is a crucial time to promote Sub-Sahara African cocoa and further establish supply links in this burgeoning market.

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