Technical Efficiency in Ghana’s Cocoa Bean Industry: Evidence from Western Region of Ghana

Abstract

This study analyses the determinants of output and technical efficiency of cocoa production using cross-sectional data collected from 160 cocoa farmers in the Sefwi-Wiawso Municipality, Ghana. The study employed the stochastic frontier analysis to achieve its objectives. The analysis suggests that output of cocoa respond positively to land size and fertilizer applications. However, output of cocoa responds negatively to fungicides application. Cocoa farmers in the study area were described as exhibiting increasing return to scale. The average technical efficiency of cocoa farmers in the study area was about 76% indicating that cocoa farmers on the average produce 24% less than their potential output. Exogenous factors such as age of cocoa farmers, sex, household size, educational attainment, and membership of farmer-base-organization and the mean age of cocoa trees were found to significantly affect technical efficiency of cocoa farmers. The study therefore recommends that farm level policies oriented towards improving managerial skills with respect to the use of inputs such as fertilizer, insecticides and fungicides according to Ghana COCOBOD recommendations will be very imperative. Farmers should also be encourage to join farmer-based-organizations as this will help them have access to certain support services to improve on their efficiency level.

Keywords: Stochastic frontier analysis, technical efficiency, cocoa, Sefwi-Wiawso, Ghana