Determinants of crop choice decisions under risk: A case study on the revival of cocoa farming in the Forest-Savannah transition zone of Ghana

Abstract

The revival of cocoa farming in the Forest-Savannah Transition Zone (FSTZ) of Ghana despite high production risk raises questions on the factors underlying it, and whether the renewed interest in cocoa can be sustained. This paper examines the reasons that underlie households’ decision to farm cocoa or otherwise in the FSTZ, and how risk perceptions, demographic factors and livelihood assets predict such crop choice decisions. Methods of data collection include household surveys and key informant interviews. Four hundred and eight household heads and 32 key informants were interviewed in 12 farming communities. Findings indicate divergent crop choice decisions on cocoa among farming households. While market security generally created a strong incentive for cocoa farming, some households exhibited risk aversion by avoiding or abandoning cocoa farming. The decision to farm cocoa was negatively predicted by perceptions of drought and lack of money as the most severe risk factors of cocoa farming, the sex of the household head (being a female) and lack of land ownership and social network with cocoa farmers. Currently, it appears the renewed interest in cocoa farming can be sustained, especially considering market uncertainties for alternative crops (cashew and food crops). This may, however, not be the case in the long term. More households are likely to avoid or abandon cocoa farming if climate and food security risks should worsen as projected, and more so if the cashew market is stabilised by government. Cocoa investment programmes in the FSTZ aiming at long-term sustainability ought to target households that are more likely to farm cocoa under high production risk. Such programmes may also attract new farmers and sustain their interest in cocoa farming by enhancing their access to land, capital, and irrigation facilities (for managing drought). At the moment, crop diversification (towards cashew and food crops) rather than crop switching is needed to manage the climate, market and food security risks confronting farmers. Overall, the paper contributes to a better understanding of the determinants of farmers’ crop choice decisions on cocoa in the context of multiple risks.