Agricultural Economics and Extension Project Topics

Technical Efficiency of Cocoa Production

Technical Efficiency of Cocoa Production

Technical Efficiency of Cocoa Production

Chapter One

Aim and Objectives of Study

The aim of the study is to examine the technical efficiency of cocoa production in eight selected Local Government Areas (LGAs).

The Specific Objectives are to:

  • Estimate the technical efficiency in cocoa production.
  • evaluate trends in the volume of cocoa crop production within the study area spatially and temporally between the pre- and post-oil boom eras.
  • analyse the factors responsible for the trends in cocoa crop production and their significance over the study areas and periods.
  • examine the influence and impact of the farmers socio economic characteristics on technical efficiency in cocoa production within the study period.
  • assess the impact of relevant policies and incentives by the government and other stakeholders directed at improving cocoa crop production.



The literature review/conceptual framework for this research are stated below.

Cocoa and its Origin

Centre for Agriculture and Bio-Sciences International (CABI, 2003) writes that the word cocoa derives from the Greek words for “food of the gods” and key components being the beans (cacahuatl), pod (cacahuatzintle) and tree(cacahuaquahuitl). It is believed to have originated from several potential localities around the foot of the Andes cordillera and the upper reaches of the Amazon Hill in South America (CABI, 2003). Romain (2001) argued that it originated on the edges of the Amazon and Orinoco basins in South America, noting that the cultivation of cocoa is dated to ancient times in the American tropics, particularly by the Toltec’s (900-1,200 AD).

Opeke (2003) reported that the first accurate export figure of dry cocoa beans from Nigeria was in 1910. However, it was revealed that the first exportation of cocoa beans from Nigeria was in 1895 (Sanusi and Oluyole, 2005). The crop and its products (especially chocolate) are commonly consumed worldwide. However, per capital consumption is poorly understood, with numerous countries claiming the highest.

Economic Uses of Cocoa

The utilization of the main (economic) component of cocoa, i.e. the beans is well established.

It is usually the major component of instant beverages and chocolate as well as some other foods. However, some other economic uses are not so popular since majority of these other (other economic uses) are mainly research discoveries. Furthermore, these discoveries are mostly on the by-products of cocoa. Many researchers have carried out investigations into the alternative uses of cocoa. Part of the initial discovery was that cocoa pod husk (CPH) contains pectin which can be broken down to sugars as well as ash and organic acids such as galacturonic acid (Blakemore,Dewer, and Hodge, 1966). Hence, it (CPH) could be utilized for producing fertilizer, livestock feed and soap making; (Blakemore et al, 1966). As a result of this, further studies were carried out and CPH as well as cocoa juice (mucilage) were found to be “economically useful” in producing a variety of feed rations for different livestock types, biogas, fertilizer, alchohol, pectin, soap, jam, nematicides, etc (Akinrimisi, 1971; Egunjobi, 1977, OlubamiwaandAkinwale, 2000). Further investigations led to research breakthrough in the use of cocoa bean shell which is a by- product generated during bean roasting in the cocoa processing factories (AkinsoyinuandAdeloye, 1987, Adomako andTuah, 1987, Olubamiwa et al, 2000). Also, alternative uses for cocoa beans were investigated and it was found to be useful in making soft drinks and wine when its pulp is extracted (Lopez, 1984). The beans were also found to have pharmaceutical uses(Samuel, Abdul, and Seng, 2000).




Population and Sample Frame of the Study Area

The population of interest comprises all cocoa farmers in Osun, Ogun, Ondo and Ekiti States, while the sample frame includes eight local government areas selected for this study as stated in Figure 1. The choices of cocoa farmers are based on the fact that they are the major producers and suppliers of cocoa in South West part of Nigeria.

The Cocoa farmers of the sample frame were administered questionnaires on farm sites. This is based on the assumption that they are in a better position to give credible response to the questionnaire by virtue of their position and responsibilities in the farm. However, in a few situation where the owners of the farm was unavailable, questionnaires were administered to other persons responsible for the farm operations.

Sample Size

The sample frame is the total number of cocoa farm owners in the southern western state under study.  200 cocoa farmers were randomly selected from each of Osun, Ogun, Ekiti and Ondo States. Farmers selected were actively engaged in cocoa cultivation during field survey.

Sampling Technique

Convenient sampling was used in sample selection. For each state, a total number of two hundred cocoa farmers were interviewed. The farm settlement was selected through convenient random sampling. The questionnaires were administered to cocoa farm owners directly. (Table 4).



Summary of Findings

Cocoa production in Nigeria between the 1950s and 1970s was between 150,000 and 318,000 metric tons per annum. Production started in the 1940s, peaked between 1960 and 1970 and declined in the mid-1970s-2000.  The 1970s – 2000 coincided with higher foreign exchange earnings from oil and was equally the peak of the production in what was termed ‘the oil boom’ era. However, since the 70s, attention was subsequently diverted to crude oil production to the negligence of cocoa and with the revenue from cocoa production becoming relatively insignificant Revenue from crude oil production ever since revenue has accounted for much of the government revenue budgets both in terms of capital and recurrent expenditure. Increasing urbanization and prospects for less excruciating jobs led to rural urban migration. The hectares cultivated by an average cocoa farmer in the post-oil boom era are smaller than in the pre-oil boom era. Generally, it was found that the representative cocoa farmer in South-West Nigeria is a small scale producer.

The study established that provision of cocoa seedlings, problem of assess to loan and problem of storage facilities were the major challenges to cocoa production in the pre – oil boom era while lack of interest by the younger persons in cocoa farming, lack of social amenities in the cocoa communities and old age cocoa trees are the major problems during the post-oil boom era.

The inferences from these findings in the post-oil boom era are that most of the trees in the farms have exceeded their economic life use, generally taken to be 30 years,  that new plants were not adequate enough to replace the ageing ones effectively since there was hardly any mass replanting since around the 1990s-2010. The ‘Dutch Disease’ which is the focus of the government on one sector of the economy to the detriment of others had negative effects on cocoa production. These reduced income generation and provision of basic social amenities by the government to the dominant cocoa rural producing areas in South-West Nigeria.

Findings from the Focus Group Discussion of the study revealed that the deregulation policies of the Babangida regime in 1986 and the consequent scrapping of the Cocoa Marketing Board compounded the challenges facing the cocoa producers since the market was left entirely in the hands of illegal traders and cocoa production in the hands of small holders. The ugly situation led to mass abandonment of cocoa farms.

Related to the above is the shortage of farm labour in the typical cocoa farming labour intensive human activities. The farmers and members of their families often constituted the labour force which is grossly inadequate. But the problem is compounded when young able bodied men and women particularly school leavers at all educational levels are not interested in farming. This coupled with the unattractive rural environment motivate migration to urban centres in search of white-collar jobs that are hardly readily available. Perhaps a most disturbing problem is the rarity and high cost of agro-chemicals such as fungicides, insecticides, fertilizers, herbicides and other farm inputs such as cocoa hybrid seedlings and sprayer machines. Sometimes, the agro-chemicals are too costly right from the factories and sometimes beyond the reach of peasant cocoa farmers since it passes through many intermediaries before it gets to the farmers in the village who are the final consumers.

More young farmers were involved in cocoa farming in the pre-oil boom era than the post-oil boom era. The age distribution of the cocoa farmers in the post-oil boom era show that most of them are above 60 years of age. Similarly, there were more household members involved in cocoa farming. The implications of this is that most of the farmers were getting too old and would not be able to meet the rigors of intensive care of cocoa trees required on their farms. Similar findings were established significantly for occupation priority and educational level of farmers on the level of production in the post-oil boom era.

The amount of effort put into economic activity, the risk bearing and the readiness to adopt new farming technology depended on age and literacy levels. This assertion makes age and education of cocoa farmer’s important variables.

Creation of marketing boards served as a disincentive to cocoa farmers as it represented an agency for taxation as the producer prices paid to farmers by the board were well below world prices. The oil boom also negatively affected production as greater focus was on revenue generation from oil rather than farm produce. The recommendation under the SAP policy initiative was to create structures that favoured price incentive strategies in form of administrative review of producer prices and input subsidization as means of initiating and sustaining increased aggregate output of produce. This did not achieve its set objectives however.


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