Understanding the role of the Ghanaian government in the cocoa sector

Profit or loss for the Ghanaian cocoa farmer?

State intervention can benefit Ghanaian cocoa farmers, despite the trend towards privatization. But the system in Ghana also has considerable disadvantages. These are the findings of researcher Anna Laven after years of study in Ghana, the second-largest cocoa producer in the world. Laven defended her doctoral thesis, 'The risks of inclusion. Shifts in governance processes and upgrading opportunities for small-cocoa farmers in Ghana' in June 2010 at the University of Amsterdam.

For her research, Anna Laven talked to Ghanaian cocoa farmers, buyers of cocoa, and representatives of the Ghanaian government and of large multinationals. The Ghanaian government has – unlike many other cocoa-producing countries – decided to partially liberalize the cocoa trade. The government determines fixed prices and sets quality standards for cocoa. This has a positive impact on the farmers and contributes to a stable income. For large processors of cocoa it is also beneficial, for they have a stable and reliable supplier of good quality cocoa.

 

Not every farmer benefits

The flip side of state interference also showed through Laven’s research. Farmers were less inclined to organize themselves; private buyers are bypassed because they cannot trade with foreign countries; and the more vulnerable farmers have difficulties in benefitting from the services. Moreover, under the Ghanaian system, farmers and local businesses such as cocoa buyers have little incentive to invest in the supply chain. Meanwhile, the government earns a lot of money through cocoa exports, but it is not clear whether it invests this money back into the cocoa sector. Lack of transparency, conflicts of interests and an inward-looking government inhibit this.
According to Laven, the government should be more open and flexible, in order to anticipate new market developments in the international supply chain, such as the growing demand for sustainable cocoa. When the Ghanaian government finds the right balance, it can further strengthen its position and be an example to other cocoa-producing countries.

 

Sustainable economic development

Sustainable economic development in general and supply chain development in particular are important working areas for the Royal Tropical Institute (KIT), an independent centre of knowledge and expertise in the areas of international and intercultural cooperation.. Anna Laven works at the Institute as advisor for the department of Sustainable Economic Development. She conducted her research in Ghana with the help of a grant by the NWO Foundation WOTRO Science for Global Development. NWO is the national financier of science in the Netherlands and is responsible for raising scientific research in the Netherlands to a level of excellence, via national competitiveness. WOTRO Science for Global Development, part of the Netherlands Organisation for Scientific Research, aims to finance scientific research in developmental topics, especially sustainable development and poverty alleviation.

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