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

1. An Ex Ante Evaluation of the STCP Strategy for
The Transformation of the
Forest-Agricultural Mosaic
of West Africa
James Gockowski
International Institute of Tropical Agriculture
Ibadan, Nigeria
May 21, 2009

2. 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

3. 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. The relative importance of cocoa
Farmgate Value of Output (USD$ Billion) in Cocoa Belt, 2005
other
 The relative value share of cocoa in the cocoa
industrial
vegetables, crops, $0.3
belt economy is dwarfed by the value shares of
$0.9
cocoa, $1.5
staple crops.
fruits, $1.8
Cocoa accounts
for approximately
12% of the $13 staple crops,
$8.5
billion estimated
value of total
output
4/13/2011 4
FAOSTAT

5. Cassava, plantains and yams of
equal or greater economic
significance.
cassava
Commodity
plantains
yams and cocoyams
cocoa
- 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500
Farmgate Value (millions $USD 2005)
FAOSTAT

6. Cocoa yields, farm size, and production
 Small farms have higher yields
 Large farms have higher outputs
50%
500
45%
450
Percent of total production
400
40%
cocoa yield (kg/ha)
350
35%
300
30%
250
25%
200
20%
150
15%
100
10%50
5% 0
small < 2 ha small med 2 to med large 3.8 large > 6.2 ha
0% 3.7 ha to 6.2 ha
< 2 ha 2 to 3.7 ha 3.8 to 6.2 ha > 6.2 ha

7. Cocoa yields, farm size, and production
 Who should we target if economic growth is the
objective ?
Yield Quartiles
I II III IV
< 120 120 to 226 227 to 426 >426
I < 2 ha 0% 1% 2% 7%
quartile
II 2 to 3.7 1% 2% 4% 11%
Size
III 3.8 to 6.2 2% 4% 6% 13%
IV > 6.2 ha 6% 9% 13% 21%
 Only 4% of producers were in the upper quartiles of
both yield and size, but they accounted for 21% of
output
Source: 2002 STCP Baseline Survey

8. 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.

9. Since 1988 a 56,300 sq km increase in area harvested
in Ghana, Nigeria, Cameroon, Cote d’Ivoire
140,000
AREA HARVESTED (SQ KM)
120,000
100,000
80,000 By comparison, GLC Plantains
2000 estimated that
Cocoa
remaining closed
60,000 canopy forest was Cassava
95,000 sq. km in 2000
40,000
20,000
0
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
YEAR
Source: FAOSTAT 2008

10. frequency
le
ss
t
(-1 han
05 13
0
50
100
150
200
250
300
350
400
450
0, 00
(-7 -10
50 00
(-4 ,-7 ]
5 00
(-1 0,-4 ]
50 00
, ]
(1 -10
50 0]
(4 ,20
50 0]
(7 ,50
(1 50, 0]
05 80
(1 0,1 0]
35 10
(1 0,1 0]
Source 2001/2002 STCP Baseline Survey
65 40
(1 0,1 0]
95 70
(2 0,2 0]
25 00
(2 0,2 0]
55 30
(2 0,2 0]
85 60
(3 0,2 0]
15 90
(3 0,3 0]
45 20
(3 0,3 0]
75 50
Mean = $233 per household
(4 0,3 0]
Median = $33 per household
05 80
(4 0,4 0]
35 10
(4 0,4 0]
65 40
net returns to investment & mgt (2001 USD$)
Technological Stagnation and Profitability
(4 0,4 0]
Proportion with negative returns= 44%
95 70
(5 0,5 0]
25 00
0, 0]
53
00
]

11. Stylized Rural Transformation
Traditional cocoa food
Commercial sector Marginal cocoa land
crop sector and labor previously
Greater Market Strong
SR4. Policies
Cocoa producers below employed in cocoa
Reliance judicary,
& Institutions
median output account and now available
contract
for investments in
for only 15% of output Input Declining price of enforce-
other activities
policy, cocoa. ment
Low productivity trade
growth (1-2%) policy, High productivity
land growth (4 - 6%)
2 million producers
tenure,
Declining numbers of Investments in
High transaction costs rural
credit producers—1 million? Other Commodities
per unit sold and Enterprises
Economies of scale
Low transaction
SR4. Policies & Institutional PublicPolicies
costs per unit sold SR4.
arrangements expenditure
& Institutions
& tax Growth in new
policy
Productivity-enhancing agricultural and
innovations non agricultural
Marketing and Processing enterprises
Innovations along Value Chain
Research & extension
policy

12. 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

13. 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

14. 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.

15. Three Investment Scenarios
 Scenario II and III are scaled back versions of
Scenario I applied to 704 and 100 cocoa
communities, respectively.
Addition to Aggregate Supply
Addition to Aggregate Supply
I I IIII Increase in
III
III
Technology----------------(% of agg tons)----------------
yield (t/ha)
----------------(000 supply)----------------
Cocoa hybrid plus fert
cocoa
Cocoa 49.4
26% 30.8
16% 1.10 2% 4.4
cocoa IPM
Plantain 292.7 182.3 0.22 25.9
Plantain 15% 9% 1%
clean plantain and fert
Cassava 259.9 162.1 10.40 23.1
Cassava 8% density 5% 1%
improved cassava at high 4.60

16. 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

17. Structure of the model
Three demand equations
Cocoa d 5
Qco 1.122 E 17 P co
d 0.6 0.2
Plantain Q pl 17,850 P pl P
ca
d 0.24 0.4
Cassava
Qca 2,666 P pl P
ca
Three supply equations
Cocoa
Qco 12.36 Pco.4 Ppl.1Pca0.01
s 0 0
s 0.01 .49 0.04
Plantain Q pl 181.1 Pco P P
pl ca
s 0.01 0.05 0.3
Cassava Qca 1,365 Pco Ppl P
ca

18. 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.

19. Results-Investment Scenario I
Millions of CFA
50,000 46,141
40,000
Price of plantain falls by 23,000 FCFA t-1, output increases by
130,000 t not 293,000 t
30,000 26,848
20,000 15,505
14,563
Price of cassava falls by 8,000 FCFA t-1, output increases bygain
Producer
105,000 t not 260,000 T
10,000
Consumer gain
0
Cocoa export tax of 4.075% generates 7.8 billion FCFA to
cocoa plantains cassava
-10,000
cover public investments
-20,000 -16,950
-19,090
-30,000

20. Results-Investment Scenario II
Millions of CFA
35,000
30,542
30,000
Price
25,000 of plantain falls by 15,500 FCFA t-1, output increases by
83,000 t
20,000 17,740
15,000 12,591
Price of cassava falls by 5,000 FCFA t-1, output increases bygain
Producer
10,000 6,699
66,000 t
5,000
Consumer gain
Export tax of 1.02% generates 1.9 billion FCFA to cover public
0
-5,000 cocoa plantains cassava
investments
-10,000
-15,000 -12,573 -11,252

21. Results-Investment Scenario III
Millions of CFA
5,000 4,582
4,000
Price of plantain falls by 2,400 FCFA t-1, output increases by
3,000 2,684
12,000 t
1,819
2,000
Price of cassava falls by 800 FCFA t-1, output increases by gain
981 Producer
1,000
10,000 t Consumer gain
0
Export tax cocoa
-1,000
of 0.16% generates 0.3 billion cassava to cover public
plantains FCFA
investments
-2,000 -1,705
-1,885
-3,000

22. 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

23. 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.

24. 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