Economics of Cocoa-Agroforest in the Gwira Banso Joint Forest Management Project in Western Region of Ghana

Abstract

Introduction of cocoa-agroforest in the Gwira Banso forest concession necessitates the following research questions: what evidence is there on the viability (profitability) of the proposed cocoa-agroforest practice? What are the short-tenn and long-term cash flow implications and how suitable are they to the farmers who are dependent on the forestland (JFM) in Western Region of Ghana, with the objective of examining the prospect of developing cocoa agroforestry systems in the light of a growing problem of deforestation and efforts to curb it. Thus the study sought to identify industrial uses of timber trees planted by farmer and the market opportunities available and prepares financial cash flows for the cocoa monocropping, cocoa agroforest and a diversified system of productive activities. In the case of cocoa-agroforest and diversified system, the analysis was carried out for with and without incentives to farmer from the project. An optimal diversified mix of production activities that provide the highest returns to farmer is also detennined. Forty heads of household participating in the intervention introduced by JFM project were selected at random for obtaining information used to address the above objectives. Information obtained includes quantity of inputs used, unit prices of inputs, yields, as well as unit prices of output. This information was supplemented with field data on crop yield and trends of yield of cocoa and kola from Cocoa Research Institute of Ghana (CRIG) and black pepper from Plant Genetic and Resources Centre (PGRC). Information on prices of timber trees and their uses were obtained from Timber Export Development Division (TEDD) and Forest Products Inspection Division (FPID). Investment analysis and linear programming were the analytical tools used. Local market prices were used whiles constant 1999 prices were also used for the price projections. Given the uncertainty about the true discount rates, prices of inputs and outputs, and yields, sensitivity analysis was done to determine the effects of various rates of increases in cost of production and declining revenue on the farming systems The results of the study indicate that while major di fferences exist in the cash flows of diversified system and the other farming systems, the cash flow difference between cocoa monocropping and cocoa agroforest are negligible. Even though all the farming systems were profitable, the diversified system is superior to cocoa monocropping and cocoaagroforests in terms of profitability and viability. Cocoa-agroforest is also more profitable and viable than cocoa monocropping. In addition to being less sensitive to different rates of declining prices or outputs and revenue, the diversified system is more robust to the combined effect of increasing costs and declining revenue than cocoa-agroforest and cocoa monocropping. The optimal solution to the LP model, which is the maximum NPV attainable from combining kola, cocoa, black pepper and timber, taking into consideration farmers’ constraints, is 056,498,960. The study recommends a more aggressive use of agroforestry as a tool for rural development and poverty alleviation as well as environmental conservation.