Effects of Risk on Cocoa Farmers’ Profitability in Ondo State, Nigeria

Abstract

This study analysed cocoa farmers’ attitude to risk and effects on their income in Ondo State, Nigeria. Multistage sampling technique was used to select a representative sample (234) for this study. Attitudinal Scale Approach (ASA) model, Gross margin and Likert’s scale were used to analysed the data collected. Results showed that the mean age of the respondents was 50.27 years with an average of 15.98 years of experience. The sources of risks perceived by the cocoa farming households as threats to cocoa production were Natural risks (63.68%), social risks (88.89%), economic risks (75.21%), production risk (52.14%) and marketing risks (76.92%). The result of ASA model using Likert’s scale showed that 37.61%, 36.75% and 25.64% of the respondents were respectively categorized as risk averse, neutral and preferring individuals. Results of costs and returns analysis of cocoa farms in the study area indicated that the average farm’s profitability level wasN185,423,725. Regression result showed that the variables that determine farmer’s income included social risks (p<0.001), economic risks (p<0.001) and production risks (p<0.001) and marketing risks (p<0.001). The study concluded that plant diseases, theft of the crop, low market demand, low labour supply and Instability of price among others are the severe types of risks that affect cocoa productivity and all year source of risk to cocoa production in the study area.