Investment in cocoa production in Nigeria: A cost and return analysis of three cocoa production management systems in the cross river state cocoa belt

Abstract

The study examined costs and returns in cocoa production in Cross River State in the context of three identified management systems of cocoa production in the area, namely owner-managed, lease-managed and sharecrop managed systems, using a hundred and fifty randomly selected cocoa farmers. Results show that cocoa production is a profitable business irrespective of management system, since all of them 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 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 in that order. Lease-managed farms were more viable compared with other management systems in terms of their high NPVs. The study surmises that given the high benefits relative to costs involved in cocoa production irrespective of management system, investments in cocoa production can be increased tremendously 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.