Free access | Research Article

The effect of price distortion on cocoa farmers’ welfare: A partial equilibrium model approach

Oluyole K.A., I.B. Adeoye, S.A. Adeleke, A.F. Okunade

Published on: 27 Dec 2017 | Volume: 4, Issue: 4 | Pages: 21-28 |

There is a dearth of information on the effect of price distortion on the welfare of cocoa farmers. This study therefore investigated the impact of price changes on cocoa farmers’ welfare. The study was carried out in the Southern Nigeria specifically Ondo, Oyo and Cross River States. Multi-stage random sampling technique was used to select 250 cocoa farmers from the study area and the data collected from the selected respondents were analysed using descriptive statistics and Partial Equilibrium Model (PEM). The result indicated that the mean age of the farmers was 48 years while 80.8% of them had formal education. Furthermore, the result showed that the Net Social Loss in Production (NSLp) was ₦308,411.24 per tonne while Welfare Loss in Production (WLp) was ₦429,432.36 per tonne. The study concluded that the existing policies on agriculture in the study area did not favour cocoa producers.