Sustainable Futures (Dec 2023)
Impact of compliance with European Union (EU) regulations on the income of actors along the cocoa supply chain in Osun state, Nigeria
Abstract
Compliance with EU regulations has received a lot of attention, but, its impact on the welfare of actors along the cocoa supply chain has been left unexplored. The study investigated the impact of compliance with EU regulations on the income of actors along the cocoa supply chain. A multi-stage sampling technique was employed to select 200 cocoa farmers, 50 produce-buyers, 50 agrochemical sellers, and 10 exporters for the study. Primary and secondary data were analyzed using the Difference in Difference (DiD), Endogenous Switching Regression Model (ESRM), and T-test. The descriptive results showed that EU regulations have changed the pattern and direction of the cocoa beans trade in such a way that after the implementation of the EU regulations. The ESRM showed that the determinants of the decision to comply with EU regulations were mainly access to extension agents and membership in an association. The causal effect of complying with EU regulations resulted in a 61.43% increase in the gross income of the farmers. The t-test analysis for produce buyers and agrochemical sellers revealed that EU regulations had no significant impact on the income of compliance. DiD indicated that EU regulation had a 1% significant impact on the value of cocoa export. The study, therefore, concluded that compliance with EU regulations on cocoa had a positive impact on the income of cocoa farmers and exporters in the study area. In line with the findings of the study, it is recommended that policies and programs that would enhance adequate and timely information systems be put in place. There should be more access to extension services which will help to increase the extent to which actors comply with EU regulations for good-quality cocoa beans.
