Dynamic Supply Response and Welfare Effects of Technological Change on Perennial Crops: The Case of Cocoa in Malaysia

Gotsch, Nikolaus; Burger, Kees

doi:10.1111/0002-9092.00155

Cited by 16 publications

(12 citation statements)

References 7 publications

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“…At the early stages, there are heavy costs which are then followed by annual benefits that continue over the full life of the trees once they have reached maturity. Thus, following Gotsch and Burger (2001), if we define it INC as the net income (or benefit or return) from i-year-old trees as expected in year t, then the net present value of the expected net income from one hectare of cocoa in year t for one cycle of I years duration amounts to:…”

Section: Net Present Value (Npv)mentioning

confidence: 99%

Investment in cocoa production in Nigeria: A cost and return analysis of three cocoa production management systems in the Cross River State cocoa belt

Nkang¹,

Ajah²,

Abang³

et al. 2009

African Journal of Food, Agriculture, Nutrition and Development

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The study examined costs and returns in cocoa production in Cross River State by comparing three identified management systems of cocoa production in the area. A two-stage sampling procedure was used to select a hundred and fifty cocoa farmers for the study. Data used in the study were collected using structured questionnaires which were administered by the Agricultural Development Programme (ADP) extension agents using the participatory approach while the data were analysed using descriptive statistics such as mean, median, standard deviation, etc. and an investment decision model comprising the net present value (NPV) and benefit-cost ratio (BCR) analysis. Results show that the respondents were predominantly small scale farmers with farm sizes ranging from one to five hectares. The age distribution of the farmers showed that 61.3% of them were among the active farming population falling within the age range of 21 to 40 years, and 16.67% of the respondents had no formal education. More than 50% of the total respondents sourced funds from their personal savings in all the management systems considered. Importantly, the study found that cocoa production is a profitable business irrespective of management system, since all of the management systems had positive net present values (NPV) at 10% discount rate. The NPV for lease-managed farms is highest. The benefit-cost ratio (BCR) at 10% discount rate was greater than one for all the three management systems, which indicates that the returns from cocoa production are high. Owner-managed farms had the highest BCR followed by lease-managed farms and sharecropped farms in that order. Lease-managed farms were more viable compared with other management systems in terms of their high NPVs. The study recommends that given the high benefits relative to costs involved in cocoa production irrespective of management system, investments in cocoa production can be increased by providing expanded access to cheap and flexible credit and land, which have presented as limiting factors in cocoa production based on the descriptive statistical analysis in the study.

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Section: Net Present Value (Npv)mentioning

confidence: 99%

Investment in cocoa production in Nigeria: A cost and return analysis of three cocoa production management systems in the Cross River State cocoa belt

Nkang¹,

Ajah²,

Abang³

et al. 2009

African Journal of Food, Agriculture, Nutrition and Development

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“…The modification of parameters to obtain the profile of a hypothetical new variety is grounded on two arguments. First, we consider the hypothesis made by Gotsch and Burger (2001) who argue that a combination of traditional breeding research and biotechnology may lead more resistance to known pests. Second, we use field observations that indicate that crop losses due to pest damage in Cameroon vary between 35 and 65% (Varlet and Berry, 1997; Nyasse, 1997); these losses are due to two main pests, the capsid flying bug ( Heteroptera: Miridae ) which feeds on pods, leaves, and stems, and the fungus Phytopthora which causes black pod disease.…”

Section: Model Parameterizationmentioning

confidence: 99%

“…Using the new variety results in lower maintenance costs but higher fertilizer use, associated with their higher yields and greater uptake of soil nutrients. On balance, the cost of inputs decreases by 10%, which is similar to the estimate used by Gotsch and Burger (2001). Annual labor requirements are assumed to be the same for existing and new varieties, as the added labor needed for harvesting a larger yield is offset by the lower labor needs for pest control.…”

Section: Model Parameterizationmentioning

confidence: 99%

“…If so, then the exogenous arrival of the new variety calls for institutional change, with higher potential payoffs calling for greater security of tenure. Such interactions are receiving increasing attention from environmental and institutional economists (e.g., Angelsen and Kaimowitz, 2001a; 2001b), but most previous work focuses on either technology (e.g., Gotsch and Burger, 2001; Gotsch and Wohlgenant, 2001), or tenure arrangements (e.g., Hill, 1963; Ruf and Zadi, 1998). Our innovation is to specify the nature of possible interactions in an explicit model, which we then calibrate to observed data.…”

Section: Introductionmentioning

confidence: 99%

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Property rights, production technology, and deforestation: cocoa in Cameroon

Kazianga

Masters

2006

Agricultural Economics

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In this article, we use a vintage-capital model with risk of eviction to assess cocoa farmers' response to changes in their tenure security and to the introduction of a new, faster-maturing cocoa variety. The model is calibrated with data from Cameroon in calendar year 2000, and then used to simulate the effects of institutional and technical change on farmer welfare and deforestation rates. Our findings can be summarized in three points. First, improved tenure security over cocoa fields increases farmers' consumption and welfare, but at the expense of more deforestation. Second, the introduction of new cocoa varieties with faster maturity and higher input response also unambiguously raises farmers' consumption and welfare. Doing so increases deforestation under insecure land tenure, but slows down deforestation under secure land tenure. Third, when introducing the two innovations together (more security and also new varieties), there is both an increase in welfare and a decline in deforestation. In sum, the availability of new cocoa cultivars calls for stronger tenure security, to accommodate investment in the new technology without increasing deforestation. Copyright 2006 International Association of Agricultural Economists.

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“…If so, then the exogenous arrival of the new variety calls for institutional change, with higher potential payoffs calling for greater security of tenure. Such interactions are receiving increasing attention from environmental and institutional economists (e.g., Angelsen and Kaimowitz, 2001a;2001b), but most previous work focuses on either technology (e.g., Gotsch and Burger, 2001;Gotsch and Wohlgenant, 2001), or tenure arrangements (e.g., Hill, 1963;Ruf and Zadi, 1998). Our innovation is to specify the nature of possible interactions in an explicit model, which we then calibrate to observed data.…”

Section: Introductionmentioning

confidence: 99%