The Determinants of Agricultural Export : Cocoa and Rubber in Cote d ’ Ivoire

As a large lake of natural endowment, most of African countries still have small and poorly developed domestic markets and must rely on foreign markets for the sale of their excess production. This study examined the factors that influence agricultural exports with specific reference to Cocoa and rubber. Secondary data was used for this study. Ordinary Least Squares regression (OLS) was used in analyzing the relevant data. The OLS findings revealed that rubber export is influenced significantly (p < 0.05) by domestic rubber production (β= 68124.857), producer price (β= 10741.503), exchange rate (β= -17078.957), domestic consumption (β= -27094.147) and interest rate (β= 14991.565). For cocoa, the OLS shows that cocoa output (β=0.847), domestic consumption (β=-0.850) and rainfall (β=44.074) significantly (p <0.05) influence cocoa export. It is recommended that there should be value addition in respect of the cocoa being exported.


Introduction
As suppliers of raw materials to western economies, since independence, Africans countries' economies have continued to produce primarily crop for export .Thus agriculture still the most important single activity for the Africans peoples.In Cote d'Ivoire, about70% of the total working population engaged in agricultural sector.Situated between Liberia and Ghana on the west coast of Africa, Côte d'Ivoire is first and foremost an agricultural country with agriculture one of the key pillars of the economy.The country is a great asset on the production and export of tropical products.Agriculture, forestry, and fisheries account for a substantial part of GDP and exports.Cote d'Ivoire produces 40% of the world's cocoa crop and is a major exporter of bananas, coffee, cotton, palm oil, pineapples, rubber, tropical wood products, and tuna.Consequently, the economy is highly sensitive to fluctuations in international prices for these products and to weather conditions.One of the most events in Cote d'Ivoire over the past decade was the devaluation of the currency in 1994 with the adoption of a Structural Adjustment Programme (SAP), supported by IMF and World Bank which was focused on export development regardless of their sectoral features, which reinforced the traditional exports of Côte d'Ivoire.However Cote d'Ivoire has been on crisis since 1999 which led to the destruction of economic infrastructure and the breakdown of government administration.The crisis brought a drastic fall in output, a substantial drop in employment, resulting in the loss of foreign investment and slow economic growth.In 2007, however undeniable progress was made in re-establishing the country's institutions, the recovery of the economy, as real GDP grew by 1.6 as compared to 0.9% in 2006(see figure 1).In 2011 the crisis found a solution by the contested election won by the current president ALassane Ouattara.Although the country remained highly vulnerable it is better to notice that the agricultural sector still the pillar of the Economic, with contribution of 35 percent of the country's GDP and 66 percent of its export revenues, provided employment for about two-thirds of the national workforce.Cash crops, mainly cocoa and coffee account for nearly 50 percent of agricultural value added.Apart from cocoa and coffee it is critical to mention the rubber planting, which ranked at the fourth as exporter produce with the global revenue estimated at 162 billionsFCFA for 221000 tons.In 2009 Cote d'Ivoire ranked the first place in Africa and seventh in the world.The country is the first exporter of natural rubber.In 1999 the total superficies was 84 000 hecters.The rubber processed transformation is doing by some companies such as SAPH,SOCB and TRCI.Howver the country export the intermediaries' products in Foreign country .This Study therefore aims to examine the factors that can influence the export of cocoa and rubber with the following specific ob rubber and investigati Source: IM respectively have show that real exchange rate has a significative negative relationship with export.However a good producer price matching with export price has a positive significance on the export.Tijani et al (1999) employed cointegration and error correction model to estimate export supply function in Nigeria using time series data that span more than three quarters of the 20th century.The results indicate that weather effect is stationary while producer price and hectare planted to cocoa have a long run equilibrium relationship with cocoa export.This findings is significant to the present study as the results established it that producer price has a long run equilibrium relationship with the rubber export.The economic justification is that ,high producer price lead to accumulation of ample revenue to producers as a result resources are diverted from sectors that have low return to sector that promise high payment at that time consequently, high price induced producers to increase production of the given product and thus assured the supply and availability of products to export.

Literatu
Regarding to the rainfall which has a positive significance effect on the yield of cocoa crop, this research find its significance to the previous finding where Akintola (1983), studying the effects of agro climatic factors on some selected crops in Ibadan.Following his correlation and regression analysis, the responsiveness of each crop yield to specific agro climatic variables (rainfall, temperature, sunshine and humidity) was determined.Based on his findings, it was known that rainfall has statistically significant effect on yields of rice, cowpea, yam, cocoa and rubber crops.

Methodology
The data for this study were obtained from secondary sources.They include the following; Food and agricultural organization (FAO), reputable journals and the Internet; and supplemented with primary data as Collected by the National Research center of Agronomy (CNRA) and Ministry of Agriculture (MINAGRI).The observation of this study is categorized as follow The pre-1970period(1961-1969), pre-SAP period (1970-1985), SAP period (1986SAP period ( -1994) ) and the post-SAP period (1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005).The pre-1970 period witnessed a minimum direct government intervention in agricultural development.The pre-Structural Adjustment Programme (SAP) era witnessed an increasing migration of able-bodied youths from the rural to urban areas.The Structural Adjustment Programme period was the era SAP was introduced in Cote d'Ivoire.The post-Structural Adjustment Programme era is a period that witnessed activities in the agricultural sector after the Structural Adjustment Programme .Ordinary least squares (OLS) method was used to determine variables affecting export of cocoa and natural rubber.The function is stated as:

Hypothesis to Be Tested
This study is testing the hypothesis zero influence of independent variables to dependent variable.It attempt to find out whether the independent variables have significant impact on dependent variable or not, that is β is significantly equal to zero or not.This hypothesis can be written as; H 0 : =0 H i : ≠0

Determinants of Cocoa Export
The result of the OLS regression is presented in Table 2.Regression analysis was carried out using log linear function.Log Linear function was used as it fits the model based on having the highest number of significant variables affecting cocoa export and the highest adjusted R 2 value.The adjusted R 2 was 0.789, implying that the independent variables explain 78.90% of the total variation in cocoa export.The value was significant at 1% for cocoa production (mt) (β=0.847) and domestic consumption (mt) (β=-0.850).The F-value (18.634;P <0.05) is significant at 1%, implying that the model is significant.

Determinants of Rubber Export
The result of the OLS method is presented in table 3. The log function best fit the model as it has the highest number of significant variables affecting rubber export and high-adjusted R 2 value.The adjusted R 2 was 0.838; Implying that the independent variables explain 83.80% of the total variation in the rubber export.The value was significant at 1% for rubber production (mt)(β=68124.857),producer price (F/mt) (β=10741.503),exchange rate (β=-17078.957),domesticconsumption (mt) (β=-27094.147)and interest rate (%) (β=14991.565).The F value (30.085;P<0.05) is significant at 1%, implying that the model was significant.

Discussion
The net trade balance value shows that agriculture remains a deficit trade balance.During the pre-1970 era, Cote d'Ivoire was involved in the exports of its agricultural products notably cocoa, natural rubber and palm oil.This contributed immensely to foreign earnings for the country.The implication of net exports shows that agricultural exports can adequately finance agricultural imports.Generally, the net trade balance value shows that Cote d'Ivoire remains a net importer with regards to agriculture.In summary, based on the results of table 1, in which net export values for the different period studied had negative values, it can be concluded that agricultural exports cannot finance agricultural imports.The positive sign for the cocoa production implies that an increase in production will lead to an increase in export.Conversely, a reduction in domestic consumption of cocoa will lead to an increase in the export of cocoa.The appropriate sign on rubber production is positive; it implies that an increase in production will stimulate an increase in export.The producer's price was also significant and has a positive sign, which is similar to the prediction above that an increase in farm gate price will result in an increase in export.This is in agreement with Okoruwa et al. (2003), who reported that an increase in producer's price of rubber will lead to an increase in export of rubber.The implication is that an increase in the producer's price of rubber to match world price will encourage maintenance of rubber farms and increased output.However a gap between export price and farm gate price discourage the rubber farmers from fully participating in rubber or cocoa production.
The official exchange rate was significant but has a negative sign.This finding is in agreement with Mesike (2005) who also reported a negative relationship between rubber export and exchange rate.This implies that the lower exchange rate that occurred during the devaluation of domestic currencies led to increased exports.Domestic consumption has a negative relationship with rubber export.This implies that a reduction in domestic consumption will lead to an increase in export supply and vice-versa

Conclusion
The African countries exports of agricultural products continue to be vital for the overseas population and their economies.And however although African countries earned substantial foreign exchange from their exports, major fluctuations in the export earnings have raised concern about their country's future growth potentials and self-sustainability.This study has established the major or significant determinants of cocoa and natural rubber exports in cote d'Ivoire,where export volume of Cocoa is crucial, estimated at 1.334000 million, while rubber export quantity account for 200652 tons in 2006.

Recommendations
The result of the study showed that output domestic consumption, interest rate, producer price and exchange rate have key roles to play in the export of cocoa and natural rubber in Cote d'Ivoire.In order to improve the export supply of the two cash crops, the following steps are necessary.Firstly as a small open economy in relation to the rest of the world, Cote d'Ivoire economic performance is sensitive to international market shocks.Consequently, stabilization policies that will enhance export promotion and productivity be implemented and sustained.Government policies will be canvassed to transform the composition of Ivoirian's export.Thus to achieve that goal, the country should re-invest its exports revenues in agro processing equipment & technologies and human capital.This will attract more revenue than raw cocoa.This will also stimulate local consumption.
Conservation and rehabilitation programmes for rubber should be organized in areas where degradative processes are about to set in.Also, uncontrolled felling of rubber trees should be checked and farmers encouraged through appropriate pricing mechanisms, to replant the cleared and rehabilitate the old rubber plantations.Cote d'Ivoire should ensure that there is only a small margin between the producer prices and world price of rubber and cocoa, so that the farmers can benefit substantially from international market.

Table 1 .
Net Trade Balance during Different Periods in Cote d'Ivoire Table 1 shows the average net trade balance during the 4 different periods.The average net trade balance for total agricultural products on value at base year price (1000 US $) from 1970 to 2004 range from -178,149.11 to 764,819.73.Average net trade balance during different Periods in Cote d'ivoire

Table 2 .
Ordinary least square estimates for cocoa export

Table 3 .
Ordinary least squares estimates for rubber export