Wednesday, 28 August 2013

Off-farm Income and Cocoa Farmers

During our randomized survey of 90 smallholder cocoa farmers in 10 communities of Asamankese district in Eastern Ghana, we found that 69% of them had off-farm income generating activities. Mostly they were trading food, some were tapping palm wine, some had chain-saws and were cutting trees for a fee. One couple worked at rubber plant. Almost none had any full-time ''salary'' job, however, such as teacher or nurse or civil servant.

Figure 1: Availability of Off-farm Income 

Immediate first reaction could be: is this a threat to cocoa supply chain? do farmers find off-farm income as alternative to cocoa farming? do farmers with off-farm income have less time and incentive to take care of their cocoa farms? 

Relationship between off-farm income 
and Cocoa yields

During data analysis in SPSS (statistical software), we found some counter-intuitive results: farmers with off-farm incomes, had higher mean cocoa productivity per 1ha of land. To avoid mistakes, we also checked if there were any ''hidden'' differences such as the mean size of cocoa farms between off-farm and no-off-farm income farmers because another data set from the same randomized survey suggested difference in mean yields depending on cocoa farm size. Yet, we saw that there was no significant difference in cocoa farm size (''extra'' income farmers had on average 2,86ha and no-off-farm income farmers had on average 3,14ha). 

Figure 2: Difference in Mean Cocoa Yields per 1ha between the farmers with and without off-farm income

Now, the next questions are: how come? do they spend some of off-farm income on cocoa farm maintenance? If they all say that they do not buy fertilizers, then, what do ''extra'' income farmers do to have higher yields? are there differences between different levels of off-farm income earners in terms of productivity?

Tests with and without outliers ( in the 2nd run we removed 5 cases with very high reported yields) showed  statistically significant differences in mean yields between 6 levels of off-farm income farmer groups: Farmers who had off-farm income level at 3001-4000 GHC/year had significantly higher yields. It is interesting to see how mean yields per 1ha change with income levels: 

1) farmers with no off-farm income yield a bit more than those with up 1000 GHC/year off-farm income
2) farmers with 1001-2000 GHC/years yield more than those with up to 1000 GHC/year
3) farmers with 2001-3000 GHC/year yield less than farmers with 1001-2000 GHC/year
4) farmers with 3001-4000 GHC/year yield more (and most than any other group) than farmers with 2001-3000 GHC/year
5) for next 2 groups average yields are declining

Figure 3: Differences in mean cocoa yields per 1ha among different off-farm income level groups

How could these differences be explained? 

Do those farmers who have no off-farm income, i.e. no off-farm distractions, yield more than those, with low off-farm income, because they do not have to go to markets, stay mostly at home and have more time to take care of their farm? And those who have low off-farm income, yield less cocoa because they earn least from off-farm activities while still had to be away, meaning neither farm gets attention nor enough money is made to hire labour for farm maintenance? Then, why farmers with 2001-3000 GHC/year off-farm income yield less cocoa than those with 1001-2000 GHC/year off-farm income? Is this because 2001-3000 GHC is some kind of transition level from petty trade to more regular commerce and they need to commit more time and efforts to make that ''jump''? Then, this ''jump'' is probably difficult to make and they are overstretched? What about those who earn 3001-4000 GHC/year from off-farm activities and also happen to have highest mean yields of cocoa? Why their next level farmers' (4001-5000 GHC off-farm income) cocoa yields decline again compared to previous group and so does a ''5001 GHC and more'' group? Is 3001-4000 GHC off-farm income and balance of time and efforts, needed to make it, a kind of threshold above which, higher they earn, lower the urgency and motivation to take proper care of cocoa farm starts? These are just some of questions which we did not have time to check this time.

Coming back to general difference in mean yields between off-farm income earners and non-earners, where is the explanation for higher average yields of farmers with off-farm income source? Our research subject was constraints for replanting aged cocoa farms and we did not go deeper on this, especially during data gathering, we did not yet know that SPSS will show the difference in mean yields between farmers with and without off-farm income. However, we assume that the answer is in more paid labour usage by ''extra'' income farmers. These include accumulating efficiency gains from weeding, pruning, spraying and harvesting activities. They do not buy fertilizer because it requires lump sums at a go but they do use labour from their own communities whom they can pay gradually or later. 

What to expect?

Now whether off-farm activities are a threat to cocoa farming, the answer is not categorical. All the problems that cocoa farming faces, do not exist only for cocoa. If farmers do not have money to buy fertilizers, the same farmers are your customers if you set up a small kiosk and start trading cola and biscuits in the village. If the roads' condition affects cocoa input availability and cost, then the same bad roads damage your car if you decide to become a local taxi driver and significant part of profits made from carrying passengers, have to be spent on repairing and spare parts. These kind of ''shared obstacles'' cap the upside and limit the step size to jump from your current ''quality of life'' to another, radically different one.

Some of these opinions were expressed by one female cocoa farmer in Kwaboanta community. She was engaged in food trading and we asked her if she was given 5,000 GHC, where would she put them, into trading business or farming? Watch the video below to see her response and explanations.

Video 1: Cocoa farmer with off-farm trading activity speaks about her choices

Again, our research subject was not to deeply study relationships between off-farm income and cocoa farming. The only relationship which our survey suggests is in mean yields. We cannot claim anything more than this and more specific studies are needed for more accurate understanding. We did not have time to ask more questions on this to each of 90 farmer.

As another farmer said, his family will not use income from trading for fertilizer purchase because it will greatly reduce ''working capital'' of their trading business. This may suggest that they might be putting some of cocoa income into trading because ''turnover ratio'' in trading is higher. Watch this farmer's response in next video.

Video 2: Cocoa farmer explains why he cannot use off-farm income for farm

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