The living standards survey and price policy reform

This paper is concerned with two related questions, first, what determines coffee and cocoa yields, and second, how should the government determine the farmgate prices for the two crops. Section 1 of the paper is a preliminary analysis of the agricultural data from the Living Standard Survey. Section 2 looks at cocoa and coffee yields and their determinants. It examines the age/yield relationships and the apparent effects of fertilizer and pesticide use on yields. ALso examined are a range of other factors that might play a role in determining yields, for example, prices of other crops, wage rates, household size, and educational levels. Section 3 turns to distributional issues involved in the pricing of cocoa and coffee. Typical budgets for farmers are presented, and their position in the income and consumption distribution descibed. Section 4 concerns itself with the analysis of policy change, and speculates on what might be the effects of moving towards the policy of allowing domestic prices to be determined by world prices. Finally, section 5 summarizes the major policy conclusions and outlines areas where further research is likely to be useful in improving policy advice.