An Ex Ante Evaluation of the STCP Strategy for

The Transformation of the

Forest-Agricultural Mosaic

of West Africa

James GockowskiInternational Institute of Tropical Agriculture

Ibadan, Nigeria

May 21, 2009

Structure of the Presentation

An Overview of Cocoa-based Agricultural

Systems

Stylized Rural Transformation

Operationalizing Cameroon’s Plan

d’Urgence

An Ex Ante Economic Evaluation of

Cameroon’s Plan d’Urgence

Concluding Remarks

Cocoa-based Agricultural Systems

Over 2 million households produce cocoa in

the humid lowlands of Cote d’Ivoire, Ghana,

Cameroon, Nigeria, Togo, Liberia, Sierra

Leone, Guinea, Eq. Guinea and Sao Tome.

Majority of producers are smallholders who

also produce cassava, plantain, palm oil, and

robusta coffee among other crops.

4/13/2011 4

The relative importance of cocoa

The relative value share of cocoa in the cocoa

belt economy is dwarfed by the value shares of

staple crops.

staple crops,

$8.5

fruits, $1.8

vegetables,

$0.9

other

industrial

crops, $0.3

cocoa, $1.5

Farmgate Value of Output (USD$ Billion) in Cocoa Belt, 2005

Cocoa accounts

for approximately

12% of the $13

billion estimated

value of total

outputFAOSTAT

Cassava, plantains and yams of

equal or greater economic

significance.

- 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500

cocoa

yams and cocoyams

plantains

cassava

Co

mm

od

ity

Farmgate Value (millions $USD 2005)

FAOSTAT

Cocoa yields, farm size, and production

Small farms have higher yields

Large farms have higher outputs

0

50

100

150

200

250

300

350

400

450

500

small < 2 ha small med 2 to

3.7 ha

med large 3.8

to 6.2 ha

large > 6.2 ha

co

co

a y

ield

(kg

/ha)

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

< 2 ha 2 to 3.7 ha 3.8 to 6.2 ha > 6.2 ha

Pe

rce

nt

of

tota

l p

rod

uc

tio

n

Cocoa yields, farm size, and production

Who should we target if economic growth is the objective ?

Only 4% of producers were in the upper quartiles of both yield and size, but they accounted for 21% of output

I II III IV

< 120 120 to 226 227 to 426 >426

I < 2 ha 0% 1% 2% 7%

II 2 to 3.7 1% 2% 4% 11%

III 3.8 to 6.2 2% 4% 6% 13%

IV > 6.2 ha 6% 9% 13% 21%

Yield Quartiles

Siz

e

quart

ile

Source: 2002 STCP Baseline Survey

Technology stagnation and the environment

Agricultural expansion is the most significant proximate cause of deforestation in West Africa

Only 17% of the Guinea Rainforest remains according to GLC 2000.

Production of cocoa, cassava and plantain have all grown by 4% p.a.

Area expansion—3% p.a.

Yield growth—1% p.a.

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

YEAR

AR

EA

HA

RV

ES

TE

D (

SQ

KM

)

Plantains

Cocoa

Cassava

Since 1988 a 56,300 sq km increase in area harvested

in Ghana, Nigeria, Cameroon, Cote d’Ivoire

Source: FAOSTAT 2008

By comparison, GLC

2000 estimated that

remaining closed

canopy forest was

95,000 sq. km in 2000

0

50

100

150

200

250

300

350

400

450

less

than

130

0

(-10

50,-1

000]

(-75

0,-7

00]

(-45

0,-4

00]

(-15

0,-1

00]

(150

,200

]

(450

,500

]

(750

,800

]

(105

0,11

00]

(135

0,14

00]

(165

0,17

00]

(195

0,20

00]

(225

0,23

00]

(255

0,26

00]

(285

0,29

00]

(315

0,32

00]

(345

0,35

00]

(375

0,38

00]

(405

0,41

00]

(435

0,44

00]

(465

0,47

00]

(495

0,50

00]

(525

0,53

00]

net returns to investment & mgt (2001 USD$)

fre

qu

en

cy

Mean = $233 per household

Median = $33 per household

Proportion with negative returns= 44%

Source 2001/2002 STCP Baseline Survey

Technological Stagnation and Profitability

Traditional cocoa food

crop sector

Cocoa producers below

median output account

for only 15% of output

Low productivity

growth (1-2%)

2 million producers

High transaction costs

per unit sold

Productivity-enhancing

innovations

Commercial sector

Greater Market

Reliance

Declining price of

cocoa.

High productivity

growth (4 - 6%)

Declining numbers of

producers—1 million?

Economies of scale

Low transaction

costs per unit sold

Marginal cocoa land

and labor previously

employed in cocoa

and now available

for investments in

other activities

Investments in

Other Commodities

and Enterprises

Marketing and Processing

Innovations along Value Chain

Growth in new

agricultural and

non agricultural

enterprises

& Institutional

arrangementsSR4. Policies SR4. Policies

& Institutions

SR4. Policies

& Institutions

& Institutional

arrangementsSR4. Policies

Strong

judicary,

contract

enforce-

ment

Research & extension

policy

Public

expenditure

& tax

policy

Input

policy,

trade

policy,

land

tenure,

rural

credit

Stylized Rural Transformation

Cameroon’s Plan d’Urgence

Since 2006, Cameroon has been implementing

the Development Strategy for the Rural Sector

with a 7.5% growth target in agricultural

output.

In June of 2008 MINADER’s Plan d’Urgence

proposed an acceleration of growth to 26%

annually for three years

An intensification strategy

Farmer field school training,

Replanting of low productivity cocoa with high yielding hybrid varieties,

Provision of improved plantain and cassava planting materials,

Diagnostic soil testing and fertilizer use on plantain and cocoa

Safe and rational pesticide use on cocoa.

Information kiosks

Three Investment Scenarios

Scenario I would achieve the 26% cocoa growth target through interventions in 1,130 communities

28,256 cocoa farmers each replant one ha with disease-tolerant IRAD/CRIG cocoa hybrids under 1 ha of intensified plantain

Plantain macro-propagation and boiling water sucker treatment

Field school training on replanting, ICPM, soil diagnostic testing and fertilizer use.

Each community w/ 1 ha of improved cassava rapid multiplication plot to plant 57,000 ha of improved cassava

Rural information kiosks operated by private sector input suppliers, cocoa buying agents and cooperatives in partnership with MINADER and IRAD.

Three Investment Scenarios

Scenario II and III are scaled back versions of

Scenario I applied to 704 and 100 cocoa

communities, respectively.

I II III

Cocoa 49.4 30.8 4.4

Plantain 292.7 182.3 25.9

Cassava 259.9 162.1 23.1

Addition to Aggregate Supply

----------------(000 tons)----------------I II III

Cocoa 26% 16% 2%

Plantain 15% 9% 1%

Cassava 8% 5% 1%

Addition to Aggregate Supply

----------------(% of agg supply)----------------Technology

Increase in

yield (t/ha)

cocoa hybrid plus fert 1.10

cocoa IPM 0.22

clean plantain and fert 10.40

improved cassava at high density 4.60

Estimated Scenario Costs

Scenario

Intervention I II III

-----------M FCFA-----------

Farmer training (cocoa replanting, IPM, intensified

plantain production) 1,413 880 125

Production and distribution of hybrid cocoa seed pods 5,195 267 38

Agricultural information kiosks 565 352 50

Cassava rapid multiplication plots 565 352 50

Plantain macro-propagation training 113 70 10

Subtotal 7,851 1,921 273

Structure of the model

4.024.0

2.06.0

5

666,2

850,17

17122.1

capl

d

ca

capl

d

pl

co

d

co

PPQ

PPQ

PEQ

Three demand equations

Three supply equations

Cocoa

Plantain

Cassava

Cocoa

Plantain

Cassava

3.005.001.0

04.049.01.0

01.01.04.0

365,1

1.181

36.12

caplco

s

ca

caplco

s

pl

caplco

s

co

PPPQ

PPPQ

PPPQ

Model simulation Supply equations shifted horizontally by the given percentage

increase.

To model taxation on cocoa exports replace P in the cocoa demand equation by P(1+v) v = tax as a percentage of the supply price.

A new equilibrium is obtained by solving system of equations for prices and quantities.

New values are compared with the 2007 base case values and the gains to producers and consumers calculated.

Results-Investment Scenario IMillions of CFA

15,505

-19,090 -16,950

14,563

46,141

26,848

-30,000

-20,000

-10,000

0

10,000

20,000

30,000

40,000

50,000

cocoa plantains cassava

Producer gain

Consumer gain

Price of plantain falls by 23,000 FCFA t-1, output increases by

130,000 t not 293,000 t

Price of cassava falls by 8,000 FCFA t-1, output increases by

105,000 t not 260,000 T

Cocoa export tax of 4.075% generates 7.8 billion FCFA to

cover public investments

Results-Investment Scenario IIMillions of CFA

12,591

-12,573 -11,252

6,699

30,542

17,740

-15,000

-10,000

-5,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

cocoa plantains cassava

Producer gain

Consumer gain

Price of plantain falls by 15,500 FCFA t-1, output increases by

83,000 t

Price of cassava falls by 5,000 FCFA t-1, output increases by

66,000 t

Export tax of 1.02% generates 1.9 billion FCFA to cover public

investments

Results-Investment Scenario IIIMillions of CFA

1,819

-1,885 -1,705

981

4,582

2,684

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

4,000

5,000

cocoa plantains cassava

Producer gain

Consumer gain

Price of plantain falls by 2,400 FCFA t-1, output increases by

12,000 t

Price of cassava falls by 800 FCFA t-1, output increases by

10,000 t

Export tax of 0.16% generates 0.3 billion FCFA to cover public

investments

Discussion of results

Cameroon cocoa seed production capacity can only replant about 2,500 ha annually; Scenario I would require importing an estimated 172 million hybrid seeds.

Scenario II would require a 7-fold increase in seed garden capacity (i.e. to replant 5% of tree stock).

Funding the estimated public investments including plantain and cassava only requires a small tax on cocoa

Main conclusions

Integrating intensive plantain and cassava

production with cocoa replanting at scale

would have a major impact on national food

supplies.

Producers who adopt innovations, see net

gains in their revenues, producers who do not,

will see declines. Consumers see only net

gains.

Next steps

Train policy analysts in Primature in the use

and interpretation of the model

Work with relevant Ministries to develop rural

transformation strategy for cocoa belt of

Cameroon

Policy briefs