The effect of producer groups on the productivity and technical efficiency of smallholder cocoa farmers in Ghana

Abstract

Producer groups are influential in Ghana’s cocoa value chain. They facilitate training, extension, education and inputs to their members. Still, there is no study on the impact of these producer groups on the technical efficiency and productivity of smallholder cocoa farmers. Using data from 217 and 199 members and non-members of cocoa producer groups, this study aimed to analyse producer groups’ impact on smallholder farmers’ technical efficiency and yield. The truncated normal distribution stochastic frontier model was adopted to estimate the farmers’ technical efficiency. Since the model showed an issue of inefficiency among the farmers, we added socio-demographic and institutional variables to account for determinants of inefficiency. Finally, we adopted an endogenous treatment regression model to analyse producer groups’ impact on the farmers’ technical efficiency by accounting for observed and unobserved biases. The study results show that farm size, labour, and capital significantly positively impact the partial elasticity of production. Age, education, use of hybrid cocoa, involvement in off-farm jobs, extension access, and producer group membership significantly affect inefficiency. The results further show that producer group membership significantly impacts technical efficiency and yield from the endogenous treatment regression model. To deal with the issues of non-participating in the producer groups, the study recommends that producer groups should be made accessible to farmers. Policymakers can promote the formation and strengthening of producer groups, leading to improved productivity and technical efficiency among cocoa farmers. This approach empowers farmers, enhances their access to resources and knowledge, and enables them to collectively address common challenges, ultimately contributing to sustainable cocoa production and better livelihoods for cocoa farming communities.