Financial viability of Cocoa agroforestry systems in Ghana: The case of Sefwi Wiawso District

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Despite the massive contribution of cocoa to the economy of Ghana it is been alleged to contribute to deforestation as new cocoa plantations in the Western Region of Ghana are planted without shade trees. Cocoa agroforestry system has been described as one of the best examples of permanent agriculture that preserves forest environment and biodiversity. A financial viability analysis of the various agroforestry systems (no shade, low shade, medium shade and heavy shade) in Ghana were undertaken to determine the most viable. A discounted cash flow analysis was carried out to estimate the benefit-cost ratio (BCR), net present value (NPV) and internal rate of return (IRR) at 20 percent interest rate. The result indicated that all the cocoa agroforestry systems were profitable. Although all the cocoa agroforestry system were viable the no shade had the highest revenue in the early years of the cocoa life but it was short lived whiles the revenue from the shade trees boosted the revenue for the heavy shade cocoa agroforestry system at the end of 50 years rotation period. Further analysis were done to determine the viability of the cocoa agroforestry systems by varying some variables like the price of cocoa, yield of cocoa and the cost of fertilizer. The viability indictors showed that all the systems were viable; the medium shade was the most viable and also ensures sustainable cocoa production over long period. Opportunity still exists for improvement in the profitability in cocoa agroforestry systems, introduction of extension education and access to credit policies are among policy options suggested by the study.
A thesis submitted to the Department of Agriculture Economics, Agribusiness and Extension Kwame Nkrumah University of Science and Technology In Partial Fulfillment of the Requirements for the Degree Of Masters of Philosophy in Agricultural Economics. 2015