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Fair Trade: Overview, Impact, Challenges
Annex 4: Case Study - Cocoa in Ghana
From 1966/67 to 1976/77 many firms were again licensed to buy cocoa on behalf of
the Cocobod. The monopoly buying system was again introduced for the period
1977/78 to 1991/92 but since 1992/93 many companies (currently 19) have been
licensed to buy cocoa on behalf of the Cocobod. The re-introduction of competition
in the internal marketing of cocoa was based on the assumption that farmers would
receive higher prices as the buyers compete to buy the cocoa. The producer price
announced by government is now regarded as a floor price.
External trade in cocoa has been the preserve of the Cocoa Marketing Company since
1947/48. It is possible that the external cocoa trade will be liberalized in the near
future, although the exact speed and extent of any such liberalisation is not yet clear.
The option currently under consideration is to allow LBCs to export 30% of their
purchases with the remaining 70% exported by the CMC. This is to test whether
complete liberalization of the external trade will be in the best interests of the country
(Ministry of Finance, 1999).
The LBCs that would be allowed to export would be those that purchase 10,000 mt
each in two previous cocoa seasons and can demonstrate appropriate export knowhow
(Ministry of Finance, 1999). The LBCs which purchase less than the required
volume of cocoa before export is permitted, would be able to negotiate with other
LBCs or CMC to export on their behalf.
Table A4.9 shows how the Produce Buying Company's share of the main crop has
declined since the domestic marketing of cocoa was partially liberalised. In 1998/99
it handled slightly less than 60% of main crop cocoa. Cashew and Spices Co. Ltd
accounted for just over 15% of the same crop, whilst three other companies
(including Kuapa Kokoo) each had market share of over 5%. A further seven LBCs
were active buyers of the 1998/99 main crop accounting for just under 5.6% of the
market between them.
Table A4.9 Market Shares (%) of Licensed Buying Companies for Main Crop
Cocoa
Company 1993/4 1994/5 1995/6 1996/7 1997/8 1998/9
Produce Buying Company 79.17 77.15 74.74 67.92 68.69 59.33
Cashew and Spices Co. Ltd 10.39 14.34 16.04 17.34 16.84 15.43
Adwumapa Buyers Ltd 0.69 1.88 1.45 2.82 4.03 6.54
Federated Commodities
Ltd
- - - - 3.21 7.90
Kuapa Kokoo Co. Ltd 0.69 0.83 1.24 2.32 3.33 5.20
Universal Crop Protection
Ltd
8.96 3.15 3.00 6.08 - 0.81
Others 0.11 2.65 3.53 3.51 3.91 4.78
Notes: During the period 1994 to 1999 inclusive, the value of the light crop fluctuated
between 7.8% and 16.9% of the value of the preceding main crop.
Minimum (pan-territorial) producer prices in Ghana are set each year by the
Cocobod’s Price Review Committee. Producer prices take into account total
production costs, including the full unsubsidised price of insecticide, plus a margin
for the farmer. It is notable that recently the Cocobod has completely removed the
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