Financial Viability of Rubber Production: Empirical Evidence from Ghana
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Published:
Jun 28, 2019
Keywords:
Financial Viability Rubber Production Smallholder Rubber Farmers Ahanta West District Ghana
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Abstract
This study examined the financial viability of rubber production in the Ahanta West District in the Western Region of Ghana. Multistage sampling technique was used to solicit primary data on costs and returns associated with rubber production from smallholder rubber farmers whose farms are in latex production. Secondary data regarding climatic and soil conditions were solicited to augment the primary data. Discounted Cash Flow analysis revealed that rubber production was financially viable at the Rubber Outgrower Unit’s loan interest rate of 11.5% per annum while production was not financially viable at the Agricultural Development Bank’s loan interest rate of 30% per annum. The constraint analysis revealed that uncompetitive rubber price was the most constraining institutional factor while high cost of labour was the most constraining production factor. The study recommends that, in order for farmers to benefit from rubber production, farmers should obtain loans from the Rubber Out grower Unit as loans offered by the Commercial Banks were associated with interest rates higher than the Internal Rate of Return of 13%.
Article Details
How to Cite
Kuwornu, J. K. M., Adanu, E. A., & Kwadzo, G. T.-M. (2019). Financial Viability of Rubber Production: Empirical Evidence from Ghana. Journal of Management Sciences Suratthani Rajabhat University, 6(1), 17–44. Retrieved from https://so03.tci-thaijo.org/index.php/msj/article/view/204157
Section
Research Article
References
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Abolagba, E. O., & Giroh, D.Y. (2006). Constraints to sustainable development of rubber industry, Nigeria. Moor Journal of Agricultural Research, 7(1), 42 - 48.
Adebayo, E. F., & Olayemi, J. K. (2005). Application of goal programming to resource allocation behaviour of dairy producers in Adamawa State, Nigeria. Journal of Sustainable Development and Environment, 1, 60 - 69.
Afari, S. V., Gockowski, J., & Dziwornu, A. K. (2010). Economic cost-benefit analysis of certified sustainable cocoa production in Ghana. 3 rd Conference of African Association of Agricultural Economists, Africa and the Global Food and Financial Crisis. Cape Town, South Africa.
Afolayan, O. S., & Ajibade, L. T. (2012). Temporal variation in perennial cash crops production in Ondo State, Nigeria. Asian Journal of Natural & Applied Sciences, 1(3): 72 - 78.
Agbeja, B. O. (2004). Valuation of investment on teak plantation establishment on a 15-yearrotation for intending small holders in Nigeria. International Workshop on Small-Holder Timber Production. World Agroforestry Centre (ICRAF), United Nations Avenue, Girigi, Nairobi, Kenya.
Agwu, A. E. (2006). Enhancing natural rubber (Heveabrasiliensis) production through extension service delivery in South West Agricultural Zone of Nigeria. Agro-Science Journal of Tropical Agriculture, Food, Environment and Extension, 5(2), 7 - 16.
Ahanta West District Assembly (undated). (n.d.). Ahanta West District Profile. Retrieved December 14, 2014, from Ghana Districts, https://www.ghanadistricts.com.
Aigbekaen, E. O., & Alika, J. E. (1984). Analysis of the socioeconomic factors associated with rubber tappers and their productivity in some selected rubber estates in Nigeria. Journal of Plantation Crops, 12(1), 47 - 55.
Akpan, A. U., Edem, S. O., & Ndaeyo, N. U. (2007). Latex yield of rubber (Heveabrasiliensis, Muell Argo) as influenced by clone planted and locations with varying fertility status. Journal of Agriculture and Social Sciences, 3(1), 28 - 30.
Amalu, U. C. (1992). Survey of properties and constraints of the acid sands of Mid-West Nigeria to higher yields of Rubber (Heveabrasiliensis, Muell Argo) Trees. Nigerian Journal of Agricultural Science, 6, 34 - 40.
Anang, B. T., Adusei, K., & Mintah, E. (2011). Farmers' assessment of benefits and constraints of Ghana's cocoa sector reform. Research Journal of Social Sciences, 3(4), 358 - 363.
Arshad, N. L., Mohamad Hassan, M. J., Ibrahim, A. G., Mahayana Bongkik, D. Y., & Wahab, M. A. 1997). Viability of Hevea plantation for wood production. Seminar on Commercial Cultivation of Teak, Sentang, Acacia and Hevea for Timber, Forest Research Institute Malaysia, Kuala Lumpur.
Asante, M. K., & Kuwornu, J. K. M. (2014). A comparative analysis of the profitability of pineapplemango blend and pineapple fruit juice processing in Ghana. Applied Studies in Agribusiness and Commerce, 8(2 - 3), 33 - 42.
Banmeke, T. O., & Omoregbee, F. E. (2009). Farmers perception of the factors militating against rubber production in Edo and Delta States of Nigeria. International Journal of Agricultural Economics and Rural Development, 2(2), 33 - 39.
Barlow, C., & Tomich, T. (1990). Indonesian agricultural development: the awkward case of smallholder tree crops. Department of Economics, Research School of Pacific Studies, Australian National University: Canberra.
Chan, H. Y., Yew, F. K., & Pushparajah, E. H. (1984). A soil suitability, technical grouping system for Hevea (3rded). Asian Soil Conference. Kuala Lumpur, Malaysia.
Delarue, J. (2008). Developing smallholder rubber production: Lessons from AFD’s Experience Vietnam report. Evaluation and Capitalisation Series Unit, AFD.
Evans, J. & Turnbull, J.W. (2004). Plantation forestry in the tropics. Role of silviculture, and use of planted forests for industrial, social, environmental and agroforestry purposes (3rded). edition, Oxford, UK, Oxford University Press.
FAO. (2001). Non-Forest Tree Plantations. Working Paper FP/6, Food and Agriculture Organisation, Forestry Department.
Giroh, D. Y., Adebayo, E. F., & Jongur, A. A. (2013). Analysis of labour productivity and constraints of rubber latex exploitation among smallholder rubber farmers in the Niger Delta Region of Nigeria. Global Journal of Agricultural Research, 1(3), 16 - 26.
Grist, P., Menz, K., & Thomas, M. (1998). Modified BEAM rubber agroforestry models: BRYIELD and RRECON. ACIAR Technical Reports Series No.42, ACIAR, Canberra.
International Rubber Study Group-IRSR. (2010). Statistical summary of world rubber. Retrieved December 12, 2014. Form https://www.rubberstudy.com/statistics.aspx.
Issaka, R. N., Senayah, J. K., Andoh-Mensah, E., & Ennin, S. A. (2012). Assessment of fertility status of soils supporting Coconut (Cocusnucifera) cultivation in Western and Central Regions of Ghana,” West African Journal of Applied Ecology, 20(1), 47 - 56.
Jumpasut, P. (2004). Global natural rubber and synthetic rubber development in the next decade: focus on new Asia. The International Rubber Conference, 1.
Kimengsi, J. N., & Muluh, N. G. (2013). A Comparative assessment of the effect of climatic variations on the crops of the Cameroon Development Corporation (CDC). Adaptation Options Environment and Natural Resources Research, 3(1), 144 - 156.
Kinnaman, B. (1997). History of Rubber. Retrieved December 19, 2014. From https://www.Immune.com/rubber/index.html.
Kochhar, S. L. (1981). Tropical crops: A textbook of economic botany. London: Macmillan.
Krishnakumar, A. K., & Potty, S. N. (1992). Nutrition of Hevea. In Sethuraj, M. R., and Mathew, N. M. (Eds.) Natural Rubber: Biology, Cultivation and Technology. Developments in crop science. Elsevier, Amsterdam, Netherlands, pp. 239 - 263.
Legendre, P. (2005). Species associations: the Kendall Coefficient of Concordance Revisited. Journal of Agricultural, Biological and Environmental Statistics, 10(2), 226 - 245.
Legendre, P. (2010). Coefficient of Concordance. In N. J. Salkind, Encyclopedia of Research Design. 1, p. 1776. Los Angeles: SAGE Publications Inc.
Lemmens, R. H., Soerianegora, I., & Wong, W. C. (1995). Timber trees: minor commercial timbers. Plant resources of South-East Asia, (PROSEA), Backhuys Publishers.
Manivong, V., & Cramb, R. A. (2007). Economics of smallholder rubber production in Northern Laos. Contributed Paper 51st Annual Conference Australian Agricultural & Resource Economics Society, Queenstown, New Zealand, 13 - 16 February.
Mesike, C. S., & Esekhade, T. U. (2014). Rainfall variability and rubber production in Nigeria. African Journal of Environmental Science and Technology, 8(1), 54 - 57.
Miller, R. L., & Brewer J. D. (2003). A-Z of social research. SAGE Publication Limited: London. Molua, E. L., & Lambi, C. M. (2007). Economic impact of climate change on agriculture in Cameroon. Policy Research Paper No.4364, 51-55, World Bank, Washington D.C.
Ogbebor, O. O. (2013). The Sustainability of agriculture in Nigeria using rubber as a case study. (Master Thesis, East Tennessee State University). https://dc.etsu.edu/etd/2312.
Opeke, L. K. (1982). Tropical Tree Crops. New York: Wiley. Oseini, J. O., & Adams, A. Q. (2013). Cost benefit analysis of certified cocoa production in Ondo State, Nigeria. Invited Paper at the 4th International Conference of the African Association of Agricultural Economists. Hammamet, Tunisia.
Osiebe, P. E. (1999). Reasons for the rapid decline in rubber production in Ethiope West Local Government Area of Delta State. (B. Agric Thesis, University of Nigeria, Nsukka).
Papenfus, M. M. (2000). Investing in oil palm: an analysis of independent smallholder oil palm adoption in Sumatra, Indonesia. Southeast Asia Policy Research Working Paper, 15.
Perkins, F. (1994). Practical cost benefit analysis: basic concepts and applications. Melbourne: Macmillan Education Australia.
Purnamasari, R., Cacho, O., & Simmons, P. (1999). Management strategies for Indonesian smallholder rubber production in South Sumatra: A bioeconomic analysis. Working Paper Series in Agricultural and Resource Economics No.99. Graduate School of Agricultural and Resource Economics, University of New England: Armidale.
Rantala, L. (2006). Rubber plantation performance in the Northeast and East of Thailand in relation to environmental conditions. University of Helsinki, Finland, Viiki Tropical Resources Institute (VITRI).
Rao, P., & Vijayakumar, K. R. (1992). Climatic requirements, In Sethuraj, M. R. and Mathew, N. M.
Natural Rubber: Biology, Cultivation and Technology). Developments in crop science, Elsevier, Amsterdam, Netherlands, pp. 200 - 220.
Rodrigo, V. H. (2007). Ecophysiological factors underpinning productivity of Heveabrasiliensis. Brazilian Journal of Plant Physiology, 19(4), 245 - 255.
Royal Forestry Department. (2000). Status of rubberwood utilization and marketing in Thailand. Technical Report, Executing Agency, Forest Research Office, Royal Forest Department, p. 90.
Rubber Board of India. (2005). Rubber and its Cultivation. Rubber Board India (RBI), Government of India, Ministry of Commerce and Industry, Kottayam.
Rudolf, W., & Hermann, W. (2009). Climate Risk and Farming Systems in Rural Cameroon. University of Hannover, Institute of Development and Agricultural Economics, Hannover, 21 - 24.
Sangsing, K. (2004). Carbon acquisition and plant water status in response to water stress of rubber (Heveabrasiliensis). (Ph.D. thesis, Kasetsart University).
Sekar, C., & Karunakaran, K. R. (1994). Economic Analysis of Cashew Plantations Under Forestry Conditions of Central Tamil Nadu. Journal of Tropical Forest Science, 6, 523 - 528.
Uraih, O. B., Abubakar, M., Balogun, F. E., Giroh, D. Y., Ogbebor, O. J., & Okwu, U. N. (2006). Assessment of Rubber Quality Consciousness Among Smallholder Rubber Farmers in Farm Settlements of Edo and Delta States of Nigeria. Journal of Sustainable Tropical Agricultural Research, 19, 46 - 51.
Viswanathan, P. K. (2005). Emerging smallholder rubber farming systems in india and Thailand: a comparative economic analysis. Asian Journal of Agriculture and Development, 5(2), 1 - 16.
Wongnaa, C. A., & Awunyo-Vitor, D. (2013). Profitability Analysis of Cashew Production in Wenchi Municipality in Ghana. Botswana Journal of Agriculture and Applied Science, 9(1), 19 - 28.
Abolagba, E. O., & Giroh, D.Y. (2006). Constraints to sustainable development of rubber industry, Nigeria. Moor Journal of Agricultural Research, 7(1), 42 - 48.
Adebayo, E. F., & Olayemi, J. K. (2005). Application of goal programming to resource allocation behaviour of dairy producers in Adamawa State, Nigeria. Journal of Sustainable Development and Environment, 1, 60 - 69.
Afari, S. V., Gockowski, J., & Dziwornu, A. K. (2010). Economic cost-benefit analysis of certified sustainable cocoa production in Ghana. 3 rd Conference of African Association of Agricultural Economists, Africa and the Global Food and Financial Crisis. Cape Town, South Africa.
Afolayan, O. S., & Ajibade, L. T. (2012). Temporal variation in perennial cash crops production in Ondo State, Nigeria. Asian Journal of Natural & Applied Sciences, 1(3): 72 - 78.
Agbeja, B. O. (2004). Valuation of investment on teak plantation establishment on a 15-yearrotation for intending small holders in Nigeria. International Workshop on Small-Holder Timber Production. World Agroforestry Centre (ICRAF), United Nations Avenue, Girigi, Nairobi, Kenya.
Agwu, A. E. (2006). Enhancing natural rubber (Heveabrasiliensis) production through extension service delivery in South West Agricultural Zone of Nigeria. Agro-Science Journal of Tropical Agriculture, Food, Environment and Extension, 5(2), 7 - 16.
Ahanta West District Assembly (undated). (n.d.). Ahanta West District Profile. Retrieved December 14, 2014, from Ghana Districts, https://www.ghanadistricts.com.
Aigbekaen, E. O., & Alika, J. E. (1984). Analysis of the socioeconomic factors associated with rubber tappers and their productivity in some selected rubber estates in Nigeria. Journal of Plantation Crops, 12(1), 47 - 55.
Akpan, A. U., Edem, S. O., & Ndaeyo, N. U. (2007). Latex yield of rubber (Heveabrasiliensis, Muell Argo) as influenced by clone planted and locations with varying fertility status. Journal of Agriculture and Social Sciences, 3(1), 28 - 30.
Amalu, U. C. (1992). Survey of properties and constraints of the acid sands of Mid-West Nigeria to higher yields of Rubber (Heveabrasiliensis, Muell Argo) Trees. Nigerian Journal of Agricultural Science, 6, 34 - 40.
Anang, B. T., Adusei, K., & Mintah, E. (2011). Farmers' assessment of benefits and constraints of Ghana's cocoa sector reform. Research Journal of Social Sciences, 3(4), 358 - 363.
Arshad, N. L., Mohamad Hassan, M. J., Ibrahim, A. G., Mahayana Bongkik, D. Y., & Wahab, M. A. 1997). Viability of Hevea plantation for wood production. Seminar on Commercial Cultivation of Teak, Sentang, Acacia and Hevea for Timber, Forest Research Institute Malaysia, Kuala Lumpur.
Asante, M. K., & Kuwornu, J. K. M. (2014). A comparative analysis of the profitability of pineapplemango blend and pineapple fruit juice processing in Ghana. Applied Studies in Agribusiness and Commerce, 8(2 - 3), 33 - 42.
Banmeke, T. O., & Omoregbee, F. E. (2009). Farmers perception of the factors militating against rubber production in Edo and Delta States of Nigeria. International Journal of Agricultural Economics and Rural Development, 2(2), 33 - 39.
Barlow, C., & Tomich, T. (1990). Indonesian agricultural development: the awkward case of smallholder tree crops. Department of Economics, Research School of Pacific Studies, Australian National University: Canberra.
Chan, H. Y., Yew, F. K., & Pushparajah, E. H. (1984). A soil suitability, technical grouping system for Hevea (3rded). Asian Soil Conference. Kuala Lumpur, Malaysia.
Delarue, J. (2008). Developing smallholder rubber production: Lessons from AFD’s Experience Vietnam report. Evaluation and Capitalisation Series Unit, AFD.
Evans, J. & Turnbull, J.W. (2004). Plantation forestry in the tropics. Role of silviculture, and use of planted forests for industrial, social, environmental and agroforestry purposes (3rded). edition, Oxford, UK, Oxford University Press.
FAO. (2001). Non-Forest Tree Plantations. Working Paper FP/6, Food and Agriculture Organisation, Forestry Department.
Giroh, D. Y., Adebayo, E. F., & Jongur, A. A. (2013). Analysis of labour productivity and constraints of rubber latex exploitation among smallholder rubber farmers in the Niger Delta Region of Nigeria. Global Journal of Agricultural Research, 1(3), 16 - 26.
Grist, P., Menz, K., & Thomas, M. (1998). Modified BEAM rubber agroforestry models: BRYIELD and RRECON. ACIAR Technical Reports Series No.42, ACIAR, Canberra.
International Rubber Study Group-IRSR. (2010). Statistical summary of world rubber. Retrieved December 12, 2014. Form https://www.rubberstudy.com/statistics.aspx.
Issaka, R. N., Senayah, J. K., Andoh-Mensah, E., & Ennin, S. A. (2012). Assessment of fertility status of soils supporting Coconut (Cocusnucifera) cultivation in Western and Central Regions of Ghana,” West African Journal of Applied Ecology, 20(1), 47 - 56.
Jumpasut, P. (2004). Global natural rubber and synthetic rubber development in the next decade: focus on new Asia. The International Rubber Conference, 1.
Kimengsi, J. N., & Muluh, N. G. (2013). A Comparative assessment of the effect of climatic variations on the crops of the Cameroon Development Corporation (CDC). Adaptation Options Environment and Natural Resources Research, 3(1), 144 - 156.
Kinnaman, B. (1997). History of Rubber. Retrieved December 19, 2014. From https://www.Immune.com/rubber/index.html.
Kochhar, S. L. (1981). Tropical crops: A textbook of economic botany. London: Macmillan.
Krishnakumar, A. K., & Potty, S. N. (1992). Nutrition of Hevea. In Sethuraj, M. R., and Mathew, N. M. (Eds.) Natural Rubber: Biology, Cultivation and Technology. Developments in crop science. Elsevier, Amsterdam, Netherlands, pp. 239 - 263.
Legendre, P. (2005). Species associations: the Kendall Coefficient of Concordance Revisited. Journal of Agricultural, Biological and Environmental Statistics, 10(2), 226 - 245.
Legendre, P. (2010). Coefficient of Concordance. In N. J. Salkind, Encyclopedia of Research Design. 1, p. 1776. Los Angeles: SAGE Publications Inc.
Lemmens, R. H., Soerianegora, I., & Wong, W. C. (1995). Timber trees: minor commercial timbers. Plant resources of South-East Asia, (PROSEA), Backhuys Publishers.
Manivong, V., & Cramb, R. A. (2007). Economics of smallholder rubber production in Northern Laos. Contributed Paper 51st Annual Conference Australian Agricultural & Resource Economics Society, Queenstown, New Zealand, 13 - 16 February.
Mesike, C. S., & Esekhade, T. U. (2014). Rainfall variability and rubber production in Nigeria. African Journal of Environmental Science and Technology, 8(1), 54 - 57.
Miller, R. L., & Brewer J. D. (2003). A-Z of social research. SAGE Publication Limited: London. Molua, E. L., & Lambi, C. M. (2007). Economic impact of climate change on agriculture in Cameroon. Policy Research Paper No.4364, 51-55, World Bank, Washington D.C.
Ogbebor, O. O. (2013). The Sustainability of agriculture in Nigeria using rubber as a case study. (Master Thesis, East Tennessee State University). https://dc.etsu.edu/etd/2312.
Opeke, L. K. (1982). Tropical Tree Crops. New York: Wiley. Oseini, J. O., & Adams, A. Q. (2013). Cost benefit analysis of certified cocoa production in Ondo State, Nigeria. Invited Paper at the 4th International Conference of the African Association of Agricultural Economists. Hammamet, Tunisia.
Osiebe, P. E. (1999). Reasons for the rapid decline in rubber production in Ethiope West Local Government Area of Delta State. (B. Agric Thesis, University of Nigeria, Nsukka).
Papenfus, M. M. (2000). Investing in oil palm: an analysis of independent smallholder oil palm adoption in Sumatra, Indonesia. Southeast Asia Policy Research Working Paper, 15.
Perkins, F. (1994). Practical cost benefit analysis: basic concepts and applications. Melbourne: Macmillan Education Australia.
Purnamasari, R., Cacho, O., & Simmons, P. (1999). Management strategies for Indonesian smallholder rubber production in South Sumatra: A bioeconomic analysis. Working Paper Series in Agricultural and Resource Economics No.99. Graduate School of Agricultural and Resource Economics, University of New England: Armidale.
Rantala, L. (2006). Rubber plantation performance in the Northeast and East of Thailand in relation to environmental conditions. University of Helsinki, Finland, Viiki Tropical Resources Institute (VITRI).
Rao, P., & Vijayakumar, K. R. (1992). Climatic requirements, In Sethuraj, M. R. and Mathew, N. M.
Natural Rubber: Biology, Cultivation and Technology). Developments in crop science, Elsevier, Amsterdam, Netherlands, pp. 200 - 220.
Rodrigo, V. H. (2007). Ecophysiological factors underpinning productivity of Heveabrasiliensis. Brazilian Journal of Plant Physiology, 19(4), 245 - 255.
Royal Forestry Department. (2000). Status of rubberwood utilization and marketing in Thailand. Technical Report, Executing Agency, Forest Research Office, Royal Forest Department, p. 90.
Rubber Board of India. (2005). Rubber and its Cultivation. Rubber Board India (RBI), Government of India, Ministry of Commerce and Industry, Kottayam.
Rudolf, W., & Hermann, W. (2009). Climate Risk and Farming Systems in Rural Cameroon. University of Hannover, Institute of Development and Agricultural Economics, Hannover, 21 - 24.
Sangsing, K. (2004). Carbon acquisition and plant water status in response to water stress of rubber (Heveabrasiliensis). (Ph.D. thesis, Kasetsart University).
Sekar, C., & Karunakaran, K. R. (1994). Economic Analysis of Cashew Plantations Under Forestry Conditions of Central Tamil Nadu. Journal of Tropical Forest Science, 6, 523 - 528.
Uraih, O. B., Abubakar, M., Balogun, F. E., Giroh, D. Y., Ogbebor, O. J., & Okwu, U. N. (2006). Assessment of Rubber Quality Consciousness Among Smallholder Rubber Farmers in Farm Settlements of Edo and Delta States of Nigeria. Journal of Sustainable Tropical Agricultural Research, 19, 46 - 51.
Viswanathan, P. K. (2005). Emerging smallholder rubber farming systems in india and Thailand: a comparative economic analysis. Asian Journal of Agriculture and Development, 5(2), 1 - 16.
Wongnaa, C. A., & Awunyo-Vitor, D. (2013). Profitability Analysis of Cashew Production in Wenchi Municipality in Ghana. Botswana Journal of Agriculture and Applied Science, 9(1), 19 - 28.