Smallholders cocoa production in Sabak Bernam: Implications on economies of scale

M. Mohd. Noor and S. Shaaban

Abstract

A Cobb-Douglas production function was applied to study economies of scale behaviour in cocoa smallholders in Sabak Bernam, Selangor, Malaysia. Variables and, labour, fertilizer and chemical were regressed on production using Ordinary Least Squares (OLS) technique. The data for the study was obtained from a survey of cocoa and coconut smallholders in Sabak Bernam, Selangor in 1982. The results showed output supply elasticities of land, labour and fertilizer inputs of 0.710, 0.053 and 0.133 respectively while the input chemical showed statistical insignificance. The production elasticity was found to be 0.9 but this does not imply declining returns to scale for cocoa smallholders in Sabak Bernam. The less than unity production elasticity indicated the exclusion of important variables especially the age of cocoa trees which is important to production. The result indicated constant returns to scale in the smallholder cocoa production in Sabak Bernam.

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