A Financial Model for Cocoa Farm Rehabilitation and Income Diversification

There are several challenges in Ghana’s cocoa sector related to the link between productivity, deforestation, and land tenure. Historic government-held rights to shade trees combined with a desire to boost cocoa yields incentivized the removal of shade and promotion of sun-grown cocoa. This resulted in only short-term productivity increases, large losses in biodiversity and carbon stocks, and an increase in forest degradation and deforestation. After short-term productivity boosts, yields in sun cocoa decline. Elsewhere, shaded cocoa farms have not been replanted and old cocoa trees have declining yields. As a result, up to 40 percent of cocoa farms in Ghana have low productivity and need to be replanted. However, farmers and communities lack the financial and labor resources to replant old trees with new hybrid varieties and many farmers have insecure tenure that prevent or discourage replanting old farms. Farmers have low incomes, food security and nutrition challenges, and limited access to credit to borrow money to invest in their farms. They need information and training on best practices to rehabilitate old cocoa farms, and may need help to improve tenure security. The first two to three years of a cocoa farm are critical to develop a strong and productive cocoa tree. Implementing the best agronomic practices during this period reduces longer term risk to the farmer by helping ensure that the trees will become productive assets that generate cash flow and increase farmer livelihoods and food security. Farmers also require knowledge and tools that assist with key land use decisions, such as whether to invest in cocoa and/or other competing crops (food crops, rubber, palm oil).