IMANI Ghana reveals $2,489 annual income gap between cocoa farmers’ earnings and household needs

Per a recent report by IMANI Ghana assessing the profitability of the different cocoa production models in Ghana, none of the three prevailing cocoa farming models – full sun, shaded, and high tech – currently meet the Living Income Community of Practice (LICOP) standard of $1.96 per person per day.

The LICOP standard, set at $1.96 per person per day, equates to $298 or GHS 2,324 per month, ensuring a decent living for cocoa farmers.

Per the report, there exists a significant gap between the average annual income of cocoa farmers, which stands at about $1,087, and the benchmark household needs of $3,576 per year – an annual income gap of $2,489.

“This is equivalent to $0.60 per person per day based on a five-person household from just cocoa farming. Farmers would have to almost triple their output from 0.87 metric tonnes (MT) to over 2 MT annually, or there has to be an extreme windfall from cocoa prices in the international market to have a decent living standard based on LICOP,” posited IMANI Ghana in the report titled “Profitability and Environmental Sustainability of Cocoa Farming Models in Ghana”.

The Living Income Community of Practice (LICoP) is an organization committed to improving the lives of rural communities. LICoP is dedicated to the development of calculation methods for living and actual incomes/wages and provides advice on how to bridge the gap between actual and living incomes/wages.

Income from cocoa is the primary source of revenue for cocoa farmers across all three farming models, accounting for an average of 78% of reported household farming income.

In addition, revenues from food crops represent up to about a fifth of the overall revenue, which indicates some attempt to diversify incomes thereby corroborating existing research where cocoa farmers in Ghana identified food crop investment as their second strategy for enhancing income resilience.

According to IMANI Ghana, the shaded model emerges as the most profitable among the cocoa farming models examined, outperforming both hi-tech and full sun models.

With per-hectare net incomes of GHS 2,505 and GHS 2,042 respectively, the shaded and hi-tech models exhibit superior profitability compared to the full sun model, which records the lowest net income per hectare at GHS 523.

IMANI Ghana further notes that, despite relatively similar cost profiles across the models, with little disparity in per-hectare costs, the hi-tech model proves profitable due to its comparatively high returns. Farm management costs, particularly those associated with cocoa farming activities such as land preparation, spraying, weeding, and equipment, constitute the largest cost component across all models, driving the overall cost dynamics.

Source:norvanreports