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Title:Non-price determinants of farm-gate cocoa supply in Nigeria: an examination of the role of licensed buying agents
Author:Aromolaran, A.B.ISNI
Periodical:The Nigerian Journal of Economic and Social Studies
Geographic term:Nigeria
Abstract:The 1986 trade policy reforms dissolved the Cocoa Marketing Boards and ushered in an era of free market operations under the trade liberalization policy. The immediate rise in producer prices that resulted from this reform has generated a lot of controversy in the literature. Some analysts projected that the price rise would result in both short and long-term increases in the cocoa supplied by farmers, while others argued that price incentives are insufficient to effect a long-term increase in cocoa supply. This study critically examines this issue using data from Ondo State in southwestern Nigeria. The authors' findings support the claim that price incentives are insufficient to stimulate long-term increases in cocoa supply at the farm level. They established that certain non-price related actions of licensed buying agents (LBAs) such as the supply of credit and chemicals to farmers could play a very important role in stimulating substantial increases in short and long-term farm-gate cocoa supply in Nigeria. This study recommends that LBAs should be made the official financial intermediaries between formal financial institutions and the cocoa farmers. This, the author believes, will reduce the cost of credit monitoring by banks, decrease the number of unpaid loans and increase the average yield of loans to cocoa farmers. Bibliogr., sum. [Journal abstract]