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The Impacts of Agricultural Price Policy on Cocoa Supply in Ghana: An Error Correction Estimation

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  • Abdulai, Awudu
  • Rieder, Peter

Abstract

This paper presents an empirical investigation of the supply of cocoa in Ghana. The error correction model which avoids the familiar partial adjustment model's unrealistic assumption of a fixed target supply based on stationary expectation is used in the analysis. The model provides good empirical results, and is preferred in specification tests to the partial adjustment model. The results reveal that cocoa supply is significantly influenced by the real producer price of cocoa, real price of maize, the supply of manufactured goods and the real exchange rate. The supply of cocoa was found to be inelastic both in the short and long runs. However, the elasticities obtained in the study suggest that supply of cocoa is more responsive in a shorter time than thought previously. Copyright 1995 by Oxford University Press.

Suggested Citation

  • Abdulai, Awudu & Rieder, Peter, 1995. "The Impacts of Agricultural Price Policy on Cocoa Supply in Ghana: An Error Correction Estimation," Journal of African Economies, Centre for the Study of African Economies, vol. 4(3), pages 315-335, December.
    • Handle: RePEc:oup:jafrec:v:4:y:1995:i:3:p:315-35
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    Cited by:

    1. Mofya-Mukuka, Rhoda & Abdulai, Awudu, 2012. "Supply Response of Export Crops in Zambia: The Case of Coffee," Food Security Collaborative Policy Briefs 123556, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    2. Breisinger, Clemens & Diao, Xinshen & Kolavalli, Shashi & Thurlow, James, 2008. "The role of cocoa in Ghana's future development: Do geography and ethnic diversity matter?," GSSP working papers 11, International Food Policy Research Institute (IFPRI).
    3. Samwel J. Kabote & Jires Tunguhole, 2022. "Determinants of clove exports in Zanzibar: Implications for policy," WIDER Working Paper Series wp-2022-54, World Institute for Development Economic Research (UNU-WIDER).
    4. Henry De-Graft Acquah, 2013. "The Effect of Price and Climatic Variables on Maize Supply in Ghana," Journal of Social and Development Sciences, AMH International, vol. 4(1), pages 24-31.
    5. Abbott, Philip C., 2003. "Towards More Socially Responsible Cocoa Trade," Working Papers 14603, International Agricultural Trade Research Consortium.
    6. Mahofa, Godfrey, 2007. "Economic Analysis of Factors Affecting Cotton Production In Zimbabwe," Research Theses 134490, Collaborative Masters Program in Agricultural and Applied Economics.
    7. Ayinde, Opeyemi Eyitayo & Bessler, David Arnold & Oni, Femi Emmanuel, 2017. "Analysis Of Supply Response And Price Risk On Rice Production In Nigeria," Journal of Agribusiness and Rural Development, University of Life Sciences, Poznan, Poland, vol. 43(1), March.
    8. Maryam Asghari, 2012. "Environmental Kuznets Curve and Growth Source in Iran," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 59(5), pages 609-623, December.
    9. Awotide, D. O., 2012. "Supply Response of Maize, Millet and Sorghum in Nigeria: An Error Correction Model Approach," Nigerian Journal of Agricultural Economics, Nigerian Journal of Agricultural Economics, vol. 3(1).
    10. Libor Grega & Emmanuel Kofi Ankomah, 2016. "The Environmental Effect of Land Use in the Tenure Systems in Ghana," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 64(6), pages 1889-1897.
    11. Shikur, Zewdie Habte, 2021. "Potato and Tomato Supply and Yield Responses to Policy in Ethiopia," African Journal of Economic Review, African Journal of Economic Review, vol. 9(4), September.
    12. Verter, N. & Bečvářová, V., 2014. "Analysis of Some Drivers of Cocoa Export in Nigeria in the Era of Trade Liberalization," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 6(4), pages 1-11, December.
    13. Nyangweso, P.M. & Odhiambo, M.O. & Odunga, P., 2007. "PR - Drivers Of Agricultural Exports In Eastern Africa: Evidence From Kenya, Uganda, And Tanzania," 16th Congress, Cork, Ireland, July 15-20, 2007 345403, International Farm Management Association.
    14. Armah, Stephen E., 2008. "Explaining Ghana's Recent Good Cocoa Karma: Smuggling Incentive Argument," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6359, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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