Is there any economics in smallholder cocoyam production? Evidence from the forest agro-ecological zone of Ghana

Abstract

Background: Cocoyam is an important food security crop in Ghana because it stores better than all other root and tuber crops. Despite its socio-economic relevance, production has declined persistently since the last decade. This study attempts to examine the profitability of cocoyam production to smallholders in Ghana by estimating the returns on critical production resources. Using a multi-stage sampling technique, 150 cocoyam producers were randomly sampled across three major producing regions in Ghana. Results: Empirical results reveal that cocoyam production is generally not profitable given the present cost of capital in Ghana, suggesting why farmers are shifting from its production. A disaggregated analysis reveals that producers in Fanteakwa district have a competitive advantage over their counterparts in Asante Akyem South and Asunafo North districts in terms of relative profitability owing to higher yield and better produce price at terminal markets. Gross margin, net profit, and returns on assets, land as well as unpaid labour and management significantly varied across districts. Producing cocoyam on sole crop basis was found to significantly return higher than the predominant intercropping culture of production. Apart from production cost, gross margins, net income and returns to critical production factors under the mono-cropping system were found to be significantly higher, at 5% significance level, compared to the intercropping system. Conclusion: The study concludes that smallholder cocoyam production is presently not profitable, and hence, production scales have reduced to subsistence levels. Due to higher yield and better produce prices, Fanteakwa farmers have a competitive advantage over other producing districts. Production under the mono-cropping system is relatively profitable than under the intercropping system. However, the financial leverage of cocoyam production could be enhanced via policy alternatives directed at ensuring farmers' access to and intensification of productive inputs.