The Transformation of the Forest-Agricultural Mosaic of West Africa

An Ex Ante Evaluation of the STCP Strategy forThe Transformation of theForest-Agricultural Mosaic of West Africa James Gockowski International Institute of Tropical Agriculture Ibadan, Nigeria May 21, 2009

Structure of the Presentation An Overview of Cocoa-based Agricultural Systems Stylized Rural Transformation Operationalizing Cameroon’s Plan d’Urgence An Ex Ante Economic Evaluation of Cameroon’s Plan d’Urgence Concluding Remarks

Cocoa-based Agricultural Systems Over 2 million households produce cocoa in the humid lowlands of Cote d’Ivoire, Ghana, Cameroon, Nigeria, Togo, Liberia, Sierra Leone, Guinea, Eq. Guinea and Sao Tome. Majority of producers are smallholders who also produce cassava, plantain, palm oil, and robusta coffee among other crops.

The relative importance of cocoaFarmgate Value of Output (USD$ Billion) in Cocoa Belt, 2005 other  The relative value share of cocoa in the cocoa industrial vegetables, crops, $0.3 belt economy is dwarfed by the value shares of $0.9 cocoa, $1.5 staple crops. fruits, $1.8 Cocoa accounts for approximately 12% of the $13 staple crops, $8.5 billion estimated value of total output 4/13/2011 4 FAOSTAT

Cassava, plantains and yams of equal or greater economic significance. cassavaCommodity plantains yams and cocoyams cocoa - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Farmgate Value (millions $USD 2005) FAOSTAT

Cocoa yields, farm size, and production Small farms have higher yields Large farms have higher outputs 50% 500 45% 450 Percent of total production 400 40% cocoa yield (kg/ha) 350 35% 300 30% 250 25% 200 20% 150 15% 100 10%50 5% 0 small < 2 ha small med 2 to med large 3.8 large > 6.2 ha 0% 3.7 ha to 6.2 ha < 2 ha 2 to 3.7 ha 3.8 to 6.2 ha > 6.2 ha

Cocoa yields, farm size, and production  Who should we target if economic growth is the objective ? Yield Quartiles I II III IV < 120 120 to 226 227 to 426 >426 I < 2 ha 0% 1% 2% 7%quartile II 2 to 3.7 1% 2% 4% 11% Size III 3.8 to 6.2 2% 4% 6% 13% IV > 6.2 ha 6% 9% 13% 21%  Only 4% of producers were in the upper quartiles of both yield and size, but they accounted for 21% of output Source: 2002 STCP Baseline Survey

Technology stagnation and the environment Agricultural expansion is the most significant proximate cause of deforestation in West Africa Only 17% of the Guinea Rainforest remains according to GLC 2000. Production of cocoa, cassava and plantain have all grown by 4% p.a.  Area expansion—3% p.a.  Yield growth—1% p.a.

Since 1988 a 56,300 sq km increase in area harvested in Ghana, Nigeria, Cameroon, Cote d’Ivoire 140,000AREA HARVESTED (SQ KM) 120,000 100,000 80,000 By comparison, GLC Plantains 2000 estimated that Cocoa remaining closed 60,000 canopy forest was Cassava 95,000 sq. km in 2000 40,000 20,000 0 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 YEAR Source: FAOSTAT 2008

frequency le ss t (-1 han 05 13 0 50 100 150 200 250 300 350 400 450 0, 00 (-7 -10 50 00 (-4 ,-7 ] 5 00 (-1 0,-4 ] 50 00 , ] (1 -10 50 0] (4 ,20 50 0] (7 ,50 (1 50, 0] 05 80 (1 0,1 0] 35 10 (1 0,1 0]Source 2001/2002 STCP Baseline Survey 65 40 (1 0,1 0] 95 70 (2 0,2 0] 25 00 (2 0,2 0] 55 30 (2 0,2 0] 85 60 (3 0,2 0] 15 90 (3 0,3 0] 45 20 (3 0,3 0] 75 50 Mean = $233 per household (4 0,3 0] Median = $33 per household 05 80 (4 0,4 0] 35 10 (4 0,4 0] 65 40 net returns to investment & mgt (2001 USD$) Technological Stagnation and Profitability (4 0,4 0] Proportion with negative returns= 44% 95 70 (5 0,5 0] 25 00 0, 0] 53 00 ]

Stylized Rural Transformation Traditional cocoa food Commercial sector Marginal cocoa land crop sector and labor previously Greater Market Strong SR4. Policies Cocoa producers below employed in cocoa Reliance judicary, & Institutions median output account and now available contract for investments in for only 15% of output Input Declining price of enforce- other activities policy, cocoa. ment Low productivity trade growth (1-2%) policy, High productivity land growth (4 - 6%) 2 million producers tenure, Declining numbers of Investments in High transaction costs rural credit producers—1 million? Other Commodities per unit sold and Enterprises Economies of scale Low transactionSR4. Policies & Institutional PublicPolicies costs per unit sold SR4. arrangements expenditure & Institutions & tax Growth in new policy Productivity-enhancing agricultural and innovations non agricultural Marketing and Processing enterprises Innovations along Value Chain Research & extension policy

Cameroon’s Plan d’Urgence Since 2006, Cameroon has been implementing the Development Strategy for the Rural Sector with a 7.5% growth target in agricultural output. In June of 2008 MINADER’s Plan d’Urgence proposed an acceleration of growth to 26% annually for three years

An intensification strategy Farmer field school training, Replanting of low productivity cocoa with high yielding hybrid varieties, Provision of improved plantain and cassava planting materials, Diagnostic soil testing and fertilizer use on plantain and cocoa Safe and rational pesticide use on cocoa. Information kiosks

Three Investment Scenarios Scenario I would achieve the 26% cocoa growth target through interventions in 1,130 communities 28,256 cocoa farmers each replant one ha with disease-tolerant IRAD/CRIG cocoa hybrids under 1 ha of intensified plantain Plantain macro-propagation and boiling water sucker treatment Field school training on replanting, ICPM, soil diagnostic testing and fertilizer use. Each community w/ 1 ha of improved cassava rapid multiplication plot to plant 57,000 ha of improved cassava Rural information kiosks operated by private sector input suppliers, cocoa buying agents and cooperatives in partnership with MINADER and IRAD.

Three Investment Scenarios  Scenario II and III are scaled back versions of Scenario I applied to 704 and 100 cocoa communities, respectively. Addition to Aggregate Supply Addition to Aggregate Supply I I IIII Increase in III III Technology----------------(% of agg tons)---------------- yield (t/ha) ----------------(000 supply)----------------Cocoa hybrid plus fert cocoa Cocoa 49.4 26% 30.8 16% 1.10 2% 4.4 cocoa IPM Plantain 292.7 182.3 0.22 25.9Plantain 15% 9% 1% clean plantain and fert Cassava 259.9 162.1 10.40 23.1Cassava 8% density 5% 1% improved cassava at high 4.60

Estimated Scenario Costs ScenarioIntervention I II III -----------M FCFA-----------Farmer training (cocoa replanting, IPM, intensifiedplantain production) 1,413 880 125Production and distribution of hybrid cocoa seed pods 5,195 267 38Agricultural information kiosks 565 352 50Cassava rapid multiplication plots 565 352 50Plantain macro-propagation training 113 70 10 Subtotal 7,851 1,921 273

Structure of the modelThree demand equations Cocoa d 5 Qco 1.122 E 17 P co d 0.6 0.2 Plantain Q pl 17,850 P pl P ca d 0.24 0.4 Cassava Qca 2,666 P pl P caThree supply equations Cocoa Qco 12.36 Pco.4 Ppl.1Pca0.01 s 0 0 s 0.01 .49 0.04 Plantain Q pl 181.1 Pco P P pl ca s 0.01 0.05 0.3 Cassava Qca 1,365 Pco Ppl P ca

Model simulation Supply equations shifted horizontally by the given percentage increase. To model taxation on cocoa exports replace P in the cocoa demand equation by P(1+v)  v = tax as a percentage of the supply price. A new equilibrium is obtained by solving system of equations for prices and quantities. New values are compared with the 2007 base case values and the gains to producers and consumers calculated.

Results-Investment Scenario I Millions of CFA50,000 46,14140,000Price of plantain falls by 23,000 FCFA t-1, output increases by130,000 t not 293,000 t30,000 26,84820,000 15,505 14,563Price of cassava falls by 8,000 FCFA t-1, output increases bygain Producer105,000 t not 260,000 T10,000 Consumer gain 0 Cocoa export tax of 4.075% generates 7.8 billion FCFA to cocoa plantains cassava-10,000 cover public investments-20,000 -16,950 -19,090-30,000

Results-Investment Scenario II Millions of CFA35,000 30,54230,000Price25,000 of plantain falls by 15,500 FCFA t-1, output increases by83,000 t20,000 17,74015,000 12,591Price of cassava falls by 5,000 FCFA t-1, output increases bygain Producer10,000 6,69966,000 t 5,000 Consumer gainExport tax of 1.02% generates 1.9 billion FCFA to cover public 0 -5,000 cocoa plantains cassavainvestments-10,000-15,000 -12,573 -11,252

Results-Investment Scenario III Millions of CFA5,000 4,5824,000Price of plantain falls by 2,400 FCFA t-1, output increases by3,000 2,68412,000 t 1,8192,000Price of cassava falls by 800 FCFA t-1, output increases by gain 981 Producer1,00010,000 t Consumer gain 0Export tax cocoa-1,000 of 0.16% generates 0.3 billion cassava to cover public plantains FCFAinvestments-2,000 -1,705 -1,885-3,000

Discussion of results Cameroon cocoa seed production capacity can only replant about 2,500 ha annually; Scenario I would require importing an estimated 172 million hybrid seeds. Scenario II would require a 7-fold increase in seed garden capacity (i.e. to replant 5% of tree stock). Funding the estimated public investments including plantain and cassava only requires a small tax on cocoa

Main conclusions Integrating intensive plantain and cassava production with cocoa replanting at scale would have a major impact on national food supplies. Producers who adopt innovations, see net gains in their revenues, producers who do not, will see declines. Consumers see only net gains.

Next steps Train policy analysts in Primature in the use and interpretation of the model Work with relevant Ministries to develop rural transformation strategy for cocoa belt of Cameroon Policy briefs

The Transformation of the Forest-Agricultural Mosaic of West Africa

by International Institute of Tropical Agriculture

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The Transformation of the Forest-Agricultural Mosaic of West Africa Presentation Transcript