Market effects of farmer field schools in Sub‐Saharan Africa: The case for cocoa

Abstract

AbstractBillions of dollars are invested in development programs, all of which have a monitoring and evaluation component and consider only the programs’ intended effects while ignoring their market effects on prices. This study analyzes the market effects of the Cocoa Livelihood Program (CLP) in Ghana. To evaluate both the benefits to cocoa farmers and market outcomes of CLP on cocoa and other noncocoa markets, this study simulates a partial‐equilibrium farm household model. The analysis shows that CLP participating households benefit by U.S.$154 per household, while nonparticipating households benefit (through market outcome) by only U.S.$21 per household, at the 2016 participation rate of 6 percent. The net welfare changes in staple food markets (maize, rice, cassava, and yam) attributable to CLP, is estimated at U.S.$850 per household. A rise in the CLP participation rate leads to a decline in the Ghanaian cocoa price. However, net gains from the program become negative at participation rates of more than 60 percent, as supply increases and the cocoa price falls. This result suggests that CLP participation could be expanded up to 60 percent of Ghana's cocoa producing households. However, expanding cocoa demand is equally as important as expanding production if participation rates exceed 60 percent.