Sustaining the Cocoa Sector in Ghana: What Next?
Ghana cocoa is one of the few commodity sectors in Africa that has not been fully liberalized. Some competition was introduced in the local marketing of cocoa that allows licensed buyers to purchase cocoa from producers at an announced price. Both the minimum producer price and the margin are determined by an industry representative body. Despite the continued control over internal marketing and exports by Cocobod, the parastatal organization that has been existence since the 1940s, the producers actually receive a significant share of export prices, which is a key objective in the liberalization of commodity markets. Cocobod retained its role in maintaining quality even after the partial liberalization, which has helped uphold Ghana’s reputation as a producer of high quality cocoa that earns it a premium of nearly 4 percent. Using the growing revenues from expanding production and steadily increasing prices, the Cocobod in recent years has expanded its role in providing “public” goods, such as disease control through mass sprays and supply of fertilizers at subsidized prices, which it justifies as being essential to increasing productivity on smallholder farms.
As Ghana becomes an oil economy, there is now recognition that that the cocoa sector has to become even more efficient in order to survive. GSSP has been gathering data and conducting an analysis designed to identify opportunities for Ghana’s cocoa sector given this current context. Last week, Shashi Kolavalli gave a seminar at IFPRI’s Washington DC office to share preliminary findings on factors that have contributed to increasing the share of producer prices and declining export taxes; the costs and benefits associated with the government’s role in maintaining quality; and opportunities for market and non-market interventions to introduce incentives into the system to continually seek improvements in efficiency. The presentation can be found here.