Tuesday, 27 August 2013

Smallholder Cocoa Farmers and Competing Forces for ''Reinvestment''

Already from previous experience with Georgian micro-scale hazelnut and kiwifruit growers, I was, as many others, interested about the issue of what one of my former colleague called ''a missed reinvestment''. Why most of micro-scale farmers, despite knowing the benefits of fertilizers, do not or can not save some part of their crop income to buy and apply fertilizers and have more of the crop next year?

My personal opinion on this (so far! and it is evolving and may change) is that the gain from fertilizer application cannot, in absolute terms, change farmer's ''livelihood'' radically. In percentage wise it looks nice: 50% more cocoa or hazelnut, or even 100% more in some cases. However in absolute terms it does not look so radical: if you have 320kg of cocoa this year meaning say 1060 GHC ( 530US$) you may have in best case 640kg next year, meaning 2120 GHC ( 1060US$). Then there is ''time value'' factor which makes it look distant: you will have to spend money today and see benefit in 6-7 months. You already know that your life will not radically change if you earn 1060US$ a year instead of 530US$. Actually, the ''new'' net income is 1060US$ - cost of fertilizer - ''old'' expenses. In case of Ghanaian cocoa farmers, recommended dose of fertilizers per 1ha would cost, at 2013 prices, about 385 GHC. So net new profit would be: 2120 GHC - 385 GHC - pre-fertilizer expenses, i.e. 1735 GHC - pre-fertilizer expenses versus of 1060 GHC - pre-fertilizer expenses. This means net new benefit of 675 GHC/ha per year. 

But today, you have other, more urgent needs in the family and you have to address them. Your son is marrying and you cannot let yourself spoil his wedding day. Then there is a funeral of relative and you cannot go against the society and not to make contribution. One of our interviewed farmers said that he had to make almost 1000 GHC contribution to the funeral costs of his relative and he said that this tradition was wrong and outdated but when we asked him what happens if he gathers his neighbours and friends and suggests to change this tradition, he said ''oh no,no, I will be viewed as bad man''. In his case the ''costs'' which his society will impose on him, because of his revision of existing rules, are higher than benefit he may have from directing those funds to his farm.

In the mean time, farmers make ''strategic'' choices. It is not that they do not at all. For instance, spending significant part of cocoa income on education of kids is the proof of this. However, maybe with this investment into education, they hope that education can radically change at least their kids' life and they are willing to commit to it.

It is this different attitude towards ''invest in fertilizer or in education'' that makes me (so far) think that perception about how radical is the outcome in each options that makes them to choose.

The rest you can watch and hear yourself in following videos. Farmers were asked about why they cannot/do not reinvest into fertilizers and they answered sincerely where their priorities were.

Video 1: You have 10 000 GHC from cocoa sales, 
what are the reasons 
why you never used some of that money to buy fertilizers

Video 2: If you won 10 000 GHC in lottery 
how would you spend them?

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