ASSESSING THE RISK MANAGEMENT SYSTEMS AMONG COCOA FARMERS. THE CASE OF EJISU JUABENG DISTRICT

Abstract

Cocoa is the backbone of Ghana’s economy and a major foreign exchange earner. It is the most important agricultural export crop accounting for between 25-30 percent of total export earnings ($1.2 billion in 2007) and contributes about 10 percent to GDP. Ghana was formally the leading exporter of cocoa in Africa but for the past two years, she has lost that title, although we still produce the finest beans. For the past two years, the production of cocoa has gone down despite government’s intervention. In line with, the study sought to ascertain the risks and vulnerabilities in the supply of cocoa from farmland to the Produce Buying Companies for a sustainable cocoa production, to identify the prevalent risk and vulnerabilities in the supply of cocoa from farmland to PBC in Ghana. Specifically, the study sought to ascertain the risks and vulnerabilities’ impact on sustainable cocoa production and to determine the challenges in managing these risks and vulnerabilities. The source of data was basically primary through the administration of questionnaires and interviews. The population included the cocoa farmers in the Ejisu Juabeng District, COCOBOD officials and the licensed buying companies. A simple random sampling technique was used to select 50 farmers out of the population. And purposive sampling was used in the selection of 5 officials each from COCBOD and LBC. From the research, three broad categories of risks were identified viz. production, market and the enabling environmental risks. There were three main production risks that affected the supply of cocoa. They are the black pod disease, Mirids/Capsids and the swollen shoot virus. The market risks identified were counter party risk, cocoa price volatility and input price volatility. The enabling environmental risks identified were industry regulatory risk and logistic breakdown. The multiple regression equation identified to establish the impact of the risks and vulnerabilities on the supply of cocoa was y = 4.281 + -1.787(X1) + -1.507(X2) + -.160(X3). From the analysis above, the study found that all the risks negatively impacted on the supply of cocoa but the market risk was not statistically significant. It was recommended that farmers should have joint farmer’s organizations. This was due to the numerous benefits associated with these unions and also be educated formally and informally. Government and other stakeholders should also put in extra efforts in helping out farmers.