Livelihoods Diversification of Fair Trade Cocoa Farmers: Portfolio, Extent, Reasons and Drivers

  • Justice Gameli Djokoto Central University
  • Kwasi Obeng-Sarkodie Central University
  • David Tugah Dauda Cocoa Health & Extension Division


We contribute to the rural livelihood literature by assessing the livelihood diversification of Fair Trade cocoa farmers and application of fractional regression in modelling the drivers of livelihood diversification. Using data on 238 Fair Trade cocoa farm households in the Eastern Region of Ghana, we identified the portfolio of livelihoods of cocoa farming households, assessed the extent of their diversification and identified reasons for and drivers of livelihood diversification. Cocoa farm households diversified largely within agriculture with Simpson index of 0.44. Seeking seasonal wage opportunities, educating children so they can obtain non-farm jobs, loss of access to land and loss of ability to do strenuous work, were some of the reasons for diversification. These were largely out of choice rather than necessity. Ownership of land, size of cocoa farm and age of cocoa farm, drives Fair Trade cocoa farm households to diversify into other livelihoods. Polices that enhance land ownership does not only enhance owning land as an asset but
is an important driver of livelihood diversification. 

Author Biographies

Justice Gameli Djokoto, Central University

Department of Agribusiness Management

Asociate Professor

Kwasi Obeng-Sarkodie, Central University

Agribusiness Management Department



Abdul Haris, A., Balasimha, D., Sujatha, S., Bhat, R. & Abdul Khader, K.A. (1999). The influence of drip irrigation and fertiliser levels on yield and photosynthetic characteristics of cocoa in mixed cropping system with arecanut. Journal of
Plantation Crops, 27, 131-135.
Aikins, I. (2014). The Effect of Access to and Use of Agricultural Information on the Livelihood of Cocoa Farmers (Doctoral dissertation, University of Ghana).
Angeles, L. C. & Hill, K. (2009). The gender dimension of the agrarian transition: Women, men and livelihood diversification in two peri-urban farming communities in the Philippines, Gender, Place and Culture, 16 (5), 609-629.
Asmah, E. (2011). Rural livelihood diversification and agricultural sector reforms in Ghana, In Centre for the Studies of African Economies Annual Conference on Economic Development in Africa, Oxford, UK, March.
Awotide, O. D., Kehinde, A. L. & Agbola, P. O. (2010). Poverty and rural livelihood diversification among farming households in southwest Nigeria, Journal of Food, Agriculture and Environment, 8 (1), 367-371.
Bessant, K. C. (2006). A farm household conception of pluriactivity in Canadian agriculture: Motivation, diversification and livelihood Canadian Review of Sociology/Revue Canadienne de Sociologie, 43 (1), 51–72.
Bigsten, A. (1996). The Circular Migration of Smallholders in Kenya, Journal of African Economies, 5 (1), 1-20.
Bosompem, M., Kwarteng, J. A. & Ntifo-Siaw, E. (2011). Perceived impact of cocoa innovations on the livelihoods of cocoa farmers in Ghana: The sustainable livelihood framework (SL) approach, Journal of Sustainable Development in Africa, 13 (4), 285-299.
Cameron, A. C. & Trivedi, P. K. (2013). Regression analysis of count data (Vol 53), Cambridge University press.
Carr, M. K. V. & Lockwood, G. (2011). The water relations and irrigation requirements of cocoa (Theobroma cacao L.): a review. Experimental Agriculture, 47 (4), 653-676.
Curry, G., Koczberski, G., Omuru, E. & Nailina, R. (2007). Farming or foraging?:household labour and livelihood strategies amongst smallholder cocoa growers in Papua New Guinea. Black Swan Press, Perth WA, USA.
Danes, S. (1996). Adaptable livelihoods coping with food insecurity in the Malian Sahel. London: Macmillan Press.
Das, I., Dutta, M. K. & Borbora, S. (2007). Status and growth trends in area production and productivity of horticulture crops in Assam. IUP Journal of Agricultural Economics 4 (3), 7–24.
Davidson, R. & MacKinnon, J. G. (1981). Several tests for model specification in the presence of alternative hypotheses. Econometrica, 49, 781-793.
Djokoto, J. G., Afari-Sefa, V. & Addo-Quaye, A. (2015). Vegetable supply chains in Ghana: production constraints, opportunities and policy implications for enhancing food and nutritional security. International Journal of Tropical Agriculture, 33 (3), 2113-2121.
Djokoto, J. G., Afari-Sefa, V. & Addo-Quaye, A. (2017). Vegetable diversification in cocoa-based farming systems in Ghana. Agriculture & Food Security, 6:6.
Djokoto, J. G. (2015). Technical efficiency of organic agriculture: a quantitative review, Studies in Agricultural Economics, 117 (2), 61-71.
Djokoto, J.G. (2016). Ghanaian Fair Trade cocoa-producing households, livelihood diversification and efficiency, International Journal of Green Economics, 10 (2), 191–212.
Djokoto, J. G. & Gidiglo, F. K. (2016). Technical efficiency in agribusiness: A metaanalysis on Ghana, Agribusiness, 32 (3), 397-415.
Djokoto, J. G., Srofenyo, F. Y. & Arthur, A. A. A. (2016). Technical inefficiency effects in agriculture—A meta-regression, Journal of Agricultural Science, 8(2), 109-121.
Dorward, A., Poole, N., Morrisson, J., Kydd, J. & Urey, I. (2003). Markets, institutions, and technology: missing links in livelihood analysis, Development Policy Review, 21(3), 319-332.
Ellis, F. (1998). Survey article: Household strategies and rural livelihood diversification, Journal of Development Studies, 35(1), 1-38.
Ellis, F. (2000). The determinants of rural livelihood diversification in developing countries, Journal of Agricultural Economics, 51(2), 289-302.
Ellis, F. & Allison, E. (2004). Livelihood diversification and natural resource access. Access to Natural Resources Sub-Programme. Livelihood Support Programme, LSP Working Paper 9. FAO.
Evans, N. J. & Ilbery, B. W. (1993). The pluriactivity, part-time farming, and farm diversification debate Environment and Planning A, 25, 945-959.
Fair Trade Labelling Organisations International (2011). Fair Trade standard for contract production. Fair Trade International Bonner Talweg 177, 53129 Bonn, Germany.
Ghosh, J. & Bharadwaj, K. (1992). Poverty and employment in India, Ch.7 in Bernstein, H., Crow, B. & Johnson, H. (eds.), Rural Livelihoods: Crises and Responses. Oxford University Press, 139-164.
Hart, G. (1994). The dynamics of diversification in Asian rice Region Ch.2 in Koppel, B. et al. (eds.), Development or Deterioration? Work in Rural Asia Boulder, Colorado: Lynne Reinner, pp. 47-71.
Jayaweera, I. (2010). Livelihood and diversification in rural coastal communities: Dependence on ecosystems services and possibilities for sustainable enterprising in Zanzibar, Tanzania, Masters Thesis. Stockholm Resilience Centre, Stockholm
University, Stockholm, Sweden.
Kalimangasi, N. N., Kihombo, A. & Kalimangasi, N. (2014). Contribution of contract cocoa production on improving livelihood of smallholder farmers. International Journal of Scientific and Research Publications, 4(10), 1-10.
Kerua, W. & Glyde, S. (2016). Beyond the cocoa farm: A new look at farmers choices in livelihood activities and impact on productivity in selected areas of Papua New Guinea. Rural Extension and Innovation Systems Journal, 12 (1), 1-11.
Khatun, D. & Roy, B. C. (2012). Rural livelihood diversification in West Bengal: Determinants and constraints. Agricultural Economics Research Review, 25(1), 115-124.
Knudsen, M. H. & Agergaard, J. (2015). Ghana’s cocoa frontier in transition: The role of migration and livelihood diversification. Geografiska Annaler: Series B, Human Geography, 97(4), 325-342.
Kolavalli, S. & Vigneri, M. (2011). Cocoa in Ghana: Shaping the Success of an Economy. In Yes, Africa Can: Success Stories from a Dynamic Continent, edited by P. Chuhan-Pole and M. Angwafo, 201-217. Washington, DC: World Bank.
Kuklinski, F. & Adhuze, O. (2013). Baseline study report on cocoa producers’ livelihood perceptions in five pilot areas in Ghana, Côte d’Ivoire and Nigeria. Certification Capacity Enhancement.
Lama, S. (2014). Livelihood diversification and its determinants: Evidence from the household survey in backward district of west Bengal. Galaxy International Interdisciplinary Research Journal, 2(3), 68-80.
Mehta, R. (2009). Rural livelihood diversification and its measurement issues: Focus India, Paper presented at the Wye City Group on Statistics on Rural Development and Agriculture Household Income, Second Meeting, Italy, Rome, FAO Head-
Quarters, 11-12 June 2009.
Ochoa, P. M., Clapé, Y. & P Columbié, A. (2010). Respuesta en rendimientos agrícolas del cacao (Theobroma cacao Lin.) a la irrigación subterránea, bajo condiciones de producción Response in agricultural yields of the cocoa (Theobroma cacao Lin.) to the underground irrigation, under production conditions. Estación Central de Investigaciones de Café y Cacao, Santiago de Cuba (Cuba).
Ogundari, K. (2013). Crop diversification and technical efficiency in food crop production – a study of peasant farmers in Nigeria, International Journal of Social Economics, 40(3), 267–288.
Owusu-Amankwah, R. (2015). Certifications, child labour and livelihood strategies: an analysis of cocoa production in Ghana (Doctoral dissertation, Wageningen University).
Pagan, A. & Vella, F. (1989). Diagnostic tests for models based on individual data: a survey. Journal of Applied Econometric, 4, S29-S59.
Papke, L. E., & Wooldridge, J. M. (1996). Econometric methods for fractional response variables with an application to 401(k) plan participation rates. Journal of Applied Econometrics, 11, 619-632.
Rahut, D. B. & Scharf, M. (2012). Livelihood diversification strategies in the Himalayas, Australian Journal of Agricultural and Resource Economics, 56 (4), 558- 582.
Ramalho, E. A., Ramalho, J. J. & Henriques, P. D. (2010). Fractional regression models for second stage DEA efficiency analyses. Journal of Productivity Analysis, 34, 239- 255.
Ramalho, E. A., Ramalho, J. J. & Murteira, J. M. (2011). Alternative estimating and testing empirical strategies for fractional regression models. Journal of Economic Surveys, 25, 19-68.
Ramalho, E. A., Ramalho, J. J. & Murteira, J. M. (2014). A generalised goodness of‐functional form test for binary and fractional regression models. Manchester School, 82, 488-507.
Ramalho, J. J. S. (2013). FRM: Stata module to estimate and test fractional regression models, statistical software components 457542, Boston College Department of Economics.
Ramsey, J. B. (1969). Tests for specification errors in classical linear least-squares regression analysis. Journal of the Royal Statistical Society. Series B (Methodological), 350-371.
Ruivenkamp, R. O. A. G., Essegbey, G. & Frempong, G. (2017). The nature, extent and effect of diversification on livelihoods of farmers: a case study of the cocoa farmers in Ghana. International Journal of Agriculture Innovations and Research 5(5),2319-1473.
Saha, B. & Bahal, R. (2010). Livelihood diversification pursued by farmers in west Bengal, Indian Research Journal of Extension Education, 10 (2), 1-9.
Salazar, O. V., Ramos-Martin, J. & Lomas, P. L. (2016). Using household types for improving livelihood strategies of smallholders: coffee and cocoa producers in the Northern Amazon of Ecuador ((2016_02), Facultad Latinoamericana de Ciencias Sociales (FLACSO).
Sanderson, M. A., Archer, D., Hendrickson, J. Kronberg, S. Liebig, M., Nichols, K., Schmer, M. Tanaka, D. & Aguilar, J. (2013). Diversification and ecosystem services for conservation agriculture: outcomes from pastures and integrated crop–livestock systems. Renewable Agriculture and Food Systems 28(2), 129–144.
Scoones, 1. (1998). Sustainable Rural Livelihoods: A Framework for Analysis, IDS Working Paper No. 72, Brighton: Institute of Development Studies, June.
Sekumade, A. B. & Osundare, F. O. (2014). Determinants and effect of livelihood diversification on farm households in Ekiti State, Nigeria, Journal of Economics and Sustainable Development, 5(5), 104-110.
Shiyani, R. L. & Pandya, H. R. (1998). Diversification of agriculture in Gujarat: A spatiotemporal analysis, Indian Journal Agricultural Economics, 53(4), 627-39.
Taru, J. & Chazovachii, B. (2015). Rural households’ livelihoods diversification through termite utilisation in depressed region of Zimbabwe. Chinese Journal of Population Resources and Environment, 13(4), 373-378.
Wang, L. Zhang, J. L. & Liu, L. M. (2010). Diversification of rural livelihood strategies and its effect on local landscape restoration in the semiarid hilly area of the Loess Plateau, China, Land Degradation and Development, 21(5), 433–445.
World Fair Trade Organisation and Fair Trade Labelling Organisations International (2009). A Charter of Fair Trade Principles. Available online at:
Charter.pdf (accessed on 12 June 2014).
Zakaria, H., Abujaja, A. M., Adam, H. & Salifu, W. Y. (2015). Does gender make any difference in livelihoods diversification? Evidence from Northern Ghana. International Journal of Agricultural Extension and Rural Development Studies. 1(1), 36-
How to Cite
DJOKOTO, Justice Gameli; OBENG-SARKODIE, Kwasi; DAUDA, David Tugah. Livelihoods Diversification of Fair Trade Cocoa Farmers: Portfolio, Extent, Reasons and Drivers. Central Inquiry, [S.l.], v. 3, n. 1, p. 46-75, feb. 2019. Available at: <>. Date accessed: 24 may 2019.