Sunday, February 22, 2015

An optimal phased replanting approach for cocoa trees with application to Ghana

Mahrizal  1,  L. Lanier Nalley2,*,  Bruce L. Dixon3 and Jennie S. Popp4
http://onlinelibrary.wiley.com/doi/10.1111/agec.12065/abstract

Agricultural Economics

Keywords:

Q01; Q15; Q32; Cocoa; Optimal phased replacement rate; Net present value

This study solves for the optimum replacement rate (ORR) and initial replacement year (IRY) of cocoa trees (Theobroma cacao) in Ghana to maximize net present value and achieve steady state by employing a phased replanting approach. The annual ORR is 5%–7% across the three production systems studied: Low Input, Landrace Cocoa, High Input, No Shade Amazon Cocoa, and High Input, Medium Shade Cocoa. The optimal IRY ranges from year 5 to year 9 as a function of cocoa prices, fertilizer prices, labor prices, and percentage yield loss due to disease outbreaks. Deterministic results project economic gains that exceed currently practiced replacement approaches by 5.57%–14.67% across production systems with reduced, annual income volatility. The method applied in this study can be used to increase cocoa yields and stabilize income over time, and facilitate substantial quality of life improvements for many subsistence cocoa farmers in Ghana and around the world.

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