Setting up a cocoa farm
Starting a cocoa farm involves:
The largest cost element in both establishing and maintaining a plantation is the labour. Farm sizes vary and therefore labour costs vary, with many smallholders working the land themselves rather than hiring labourers. So the costs for a large estate will be higher than for a smallholder. A review of the case studies on labour usage for the maintenance of cocoa suggested that the mean labour usage, assuming a labourer works 230 days per year, in plantation conditions is 3.37 hectares per man per year. The figure for the initial establishment of the plantation would be a lower number of hectares per man per year.
Labour costs are followed by input costs such as fertilisers and pesticides; however, their use will depend on other factors such as the quality of the soil and the level of pests and diseases.
As an example, in Brazil in 1989 the input costs were considered to be 25% of the total costs to produce 750kg of beans per hectare, while labour made up 62%, with the balance consisting of administration and general expenses.
Financial success in setting up a cocoa farm requires a quick return on the initial investment and increasing yields to reduce the unit costs.
The time taken for setting up the plantation also needs to be taken into consideration. The land should be cleared and shade trees grown before planting the cocoa seedlings; this could take a year. Cocoa trees take 3-5 years to yield a crop, with hybrid varieties providing crops earlier. But cocoa trees should be productive for about 25 years.
Production costs differ widely between producing countries and therefore the price at which it becomes unprofitable to grow cocoa will be different for different countries.
Please find below some examples:
Contribution of various farm operations and inputs to cocoa production costs in Ghana at current (1995) prices/ha
Weeding 45,000 cedis
Capsid control 3,750 cedis
Black pod control 45,000 cedis
Other operations 114,750 cedis
Insecticides (Capsids) 12,000 cedis
Fungicide (Black Pod) 52,800 cedis
Fuel mixture 4,570 cedis
Fertilizer 138,600 cedis
Cutlasses 6,000 cedis
Mistblower 7,200 cedis
Knapsack sprayer 5,477 cedis
Total production cost 435,147 cedis
(Average cedi/US$ exchange rate for 1995 = 1200 [source: IMF])
In February 2000 the US attaché reported that the official published production costs of an Ivorian farmer ranged between 194 and 266 F CFA/kg for traditional production depending on whether the farmer was paying labour costs of between 800 F CFA and 1,200 F CFA per day. For modern production, using hybrid seeds and inputs, production costs ranged between 224 and 285 F CFA/kg with labour costs between 800 and 1,200 F CFA per day.
In January 2000 a Reuters news story reported average Ivorian production costs at between 236 and 296 CFA francs per kg. Modern hybrid trees produce 900 kg per hectare per year, compared with 400 kg from traditional methods, but the hybrids require more cash for spraying and fertiliser.
The cost analysis indicated that the production cost, at an annual production of 100 tons of dried cocoa beans, was Rp 79.50/kg dried beans.
Region production cost (b) 1989 F/kg
South 0 to 50
Lekie 50 to 80
Mbam (a) 20 to 100
Meme 150 (b) (200 to 300)
(a) pioneer zone, young plantations
(b) phytosanitary products 100% subsidised in the SODECAO zone (South, Lekie, Mbam)
Wood, G.A.R. and Lass, R.A., Cocoa. Longman, 4th edition, 1985
Mossu, G. Cocoa. CTA/Macmillan Press, 1992
Dand, R., The International Cocoa Trade. Woodhead Publishing, 1993
E.G. Asante The economic relevance of plant disease and pest management in the Ghana Cocoa Industry. First International Cocoa Pests and Diseases Seminar, Accra, Ghana, 6-10 November 1995, pp288-301
US attache report on Ivory Coast cocoa. USDA, 7 February 2000
Crimmins, C. RTRS - Low prices threaten cocoa quality. Reuters, 1pp, 13 January 2000
Sri-Mulato, Atamwinata, O., Yusianto, Handaka, Muehlbauer, d. W. Kinerja Model Unit Sentralisasi Pengolahan Kakao Rakyat Skala Kelompok Tani. (The performance of a model of cocoa centralized processing unit for cooperative use.) Pelita Perkebunan, 13 (2): 100-114, August 1997
B. Losch, J.L. Fusillier, P. Dupraz. Strategies des producteurs en zone cafière et cacaoyère du Cameroun. CIRAD, 1991