Influence of non-price incentives on the choice of cocoa licensed buying companies by farmers in the Western North of Ghana

Abstract

Purpose The purpose of this paper is to examine the factors influencing the choice and the amount of cocoa beans sold to public and private licensed buying companies in the Western North of Ghana. Design/methodology/approach The study was conducted in the Western North of Ghana. Cragg’s Double Hurdle model was used to examine the factors influencing the choice of licensed buying company (LBC) whereas Kendall’s coefficient of concordance was employed in analysis of the marketing challenges. Findings The results showed that non-price incentives determine the choice and the amount cocoa beans sold to an LBC. Specifically, education, years of experience in cocoa farming and timely payment of sold cocoa beans positively influence the choice of public LBC. However, off farm job participation, provision of credit facilities and extension services affect the choice of private LBC as marketing outlet. Perceived low price of cocoa beans, inadequate credit support, and adjustment of scales used in weighing of cocoa beans were identified as the most important challenges confronting farmers. Research limitations/implications The research provides important information on non-price incentives influencing cocoa marketing outlet decision as well as the marketing challenges faced by farmers which can contribute to improving internal marketing efficiency of the cocoa industry in Ghana. Besides, this study also extends the frontiers in terms of methodological approach by adopting Cragg’s Double Hurdle Model in addressing the research question. Originality/value The research provides important information on non-price incentives influencing cocoa marketing outlet decision as well as the marketing challenges faced by farmers which can contribute to improving internal marketing efficiency of the cocoa industry in Ghana. Besides, this study also extends the frontiers in terms of methodological approach by adopting Cragg’s Double Hurdle Model in addressing the research question.

Profitability and choice of marketing outlets: evidence from Ghana's tomato production

“…As cost of labor increases by one Ghana Cedi, the probability of the farmer selling tomato to a wholesaler will increase by 0.7%, all things being equal. This is because wholesalers usually buy in bulk, and therefore farmers who sell to wholesalers tend to cultivate larger acreages of tomatoes which requires huge costs of labor (Robinson and Kollavali, 2010b; Melese et al , 2017; Bannor et al , 2019).…”

Examining the willingness to produce organic vegetables in the Bono and Ahafo regions of Ghana

“…The two-stage process was preferred because the calculated value of λi was higher than chi-square ( χ 0.01 ) critical value (Katchova and Miranda, 2004; Bannor et al , 2019, 2020). Beyond this, a selectivity bias test was performed for a choice decision on either the Cragg's Double Hurdle or Heckman selection models.…”

“…However, the Inverse Mills Ratio, estimated in the first stage, accounts for sample selection. From Table 4, the Inverse Mills Ratio has a significant p -value of 0.028 (refer to Table 4); therefore, the Heckman selection model was then preferred to Cragg's Double Hurdle Model as two-step model (Bannor et al , 2019, 2020).…”

Drivers of youth in cocoa value chain activities in Ghana

“…Also, access to credit allows rural households to enter into productivity activities such as cocoa value chain (Reyes et al, 2012). Bannor et al (2019) affirmed the importance of credit in the cocoa sector by indicating that its unavailability limits farmers' production capacity.…”

“…In line with a recommendation by Haggblade et al (2015), role models in the agricultural value chain should be made accessible to the youth as they can show them a wide range of professional opportunities in modern agribusiness and commercial agriculture. Lastly, the challenge of access to credit can be minimized if the youth establish contractual arrangements with Cocoa Licensed Buying Companies (LBCs) as being advocated by Foundjem-Tita et al (2016) and Bannor et al (2019). 3.…”