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GLOBAL PRICE RISES HAVE IMPROVED THE STATE OF THE NATION'S FINANCES, WHILE GOVERNMENT POLICY HAS DONE THE SAME FOR ITS COCOA FARMERS

The average American’s passion for chocolate has been good news for Ghana, which is one of the world’s leading suppliers of cocoa beans, harvesting up to 400,000 tons of cocoa every year.
Cocoa first arrived in Ghana in the early years of the nineteenth century, while the first shipments left the country in 1885. Since then, it has become one of the pillars of the economy and a key source of hard currency. Ghana is now the second largest producer in the world behind Ivory Coast. The core cocoa producing areas are in the south of the country and along the Volta River.

AT PRESENT 80% of the crop is exported, leaving just a fifth for domestic processing. The long-term strategy is to turn this around

Ironically, political upheaval in Ivory Coast during the past year has impacted positively on Ghana’s many thousands of cocoa farmers, with market prices soaring over $2,000 per ton, as global supplies were hit. On the macro level this means better economic growth prospects for Ghana as a result of more foreign exchange in the coffers; on the ground, it means more cash in the pockets of ordinary people.

Moreover, in recent years, the government has been steadfast in raising prices paid to farmers in a bid to curb cocoa smuggling. Prices have increased to as much as four times the level of a few years ago, to try and match international rates. This gesture has been well-received among the rural cocoa growing communities. In fact, in the past two decades, cocoa production in Ghana has made a remarkable recovery from much lower levels in the mid-1980s, during a period of stagnation, as a result of a government rehabilitation initiative supported by the World Bank.

The Ghana Cocoa Board, known as Cocobod, is the main government agency involved in the development of the industry. Established in 1947, it has, in recent years, implemented various policies to liberalize the industry and to increase the extent of private sector participation. It reverted to a multiple buying system, currently with around 18 licensed buyers, back in 1993 following a government decision to re-introduce competition to the sector. Major reforms within Cocobod itself have slashed staff numbers from 48,000 in 1987 to around 10,000 today and have improved operating and financing efficiencies.

KWAME SARPONG Chief Executive Officer of Ghana Cocoa Board

Cocobod’s Chief Operating Officer, Kwame Sarpong. believes that now is the right time for foreign companies to take an interest in the country’s cocoa investment opportunities, especially on the processing and manufacturing side. One of the main challenges facing Ghana is to add value to its cocoa production. Presently, it exports around 80% of the harvest, leaving only 20% for domestic processing. Cocobod’s long-term strategy is to reverse these figures, although this will require significant investment from overseas. Cocobod wants to join hands with foreign investors in reshaping Ghana’s most cherished industry, Mr. Sarpong says.

In a further commitment to privatization, the government intends to sell a 25% stake in the Cocoa Processing Company via the stock exchange in Accra. The company, a Cocobod subsidiary, owns two factories making chocolate and other confectionery products locally. The government hopes to attract the interest of foreign investors through the partial sale.

Ghana has also established itself as a center of excellence in the study and cultivation of cocoa. The Cocoa Research Institute of Ghana, for example, pioneers work in areas such as disease and pest control. It will play a critical role in helping Cocobod raise overall cocoa production to 500,000 tons over the coming decade, using specially developed nutrients and fertilizers as well as increasing the number of plants under cultivation. Another challenge will be to improve the country’s transportation infrastructure to handle the anticipated growth.