Economic Evaluation of Cocoa Production: A Case Study of the Price Boom of Year2023-2024

Abstract

Economic analysis of cocoa production during the price boom period (2023-2024) was
carried out in Oluyole Local Government Area of Oyo State South-west Nigeria.
Multi-staged sampling procedure was used to select respondents and data were
collected from 40 cocoa farmers using structured questionnaire and scheduled
interview. Data collected were analyzed using descriptive statistics, gross margin
analysis, profitability and efficiency ratios as well as linear regression analysis. Results
showed that the mean age of the respondents was 54 years. Some of the farmers had
tertiary education (32.5%) and majority have 5-15 years farming experience (35.0%).
The profitability and efficiency ratios were 5.22 and 6.22 respectively implying that
cocoa production in the study area is profitable and efficient. The result revealed that
the coefficient of determination (R2) was 55.0% which shows that the variables could
explain 55.0% of the variation in the dependent variable. Marital status, farm size and
transport cost were positive and significant at 1.0%, 5.0% and 10.0% respectively.
This implies that marital status, farm size and transport costs contribute positively and
are the major factors contributing to the production and marketing of cocoa in the study
area. Also the labour cost was negative but significant and therefore, has a negative
relationship with the total revenue of the farmers.
It was however, recommended that cocoa farmers should sustain the momentum of
rehabilitation of their old cocoa plantations and also establish new ones. Youth in the
area should also be encouraged to venture into cocoa farming.