COCOBOD — State control or full liberalisation?

Dr John Osae-Kwapong Politics Mar - 15 - 2025 , 09:57 5 minutes read

The cocoa sector highlights in the just-presented Fiscal Year (FY) 2025 budget are extremely worrying.

It reiterates what the President also said in his State of the Nation Address (SONA) on February 27, 2025.

The cocoa sector, according to the SONA and FY 2025 budget, is characterised by high debt.

Several factors may explain this but the lack of operational efficiency may also explain the current situation COCOBOD finds itself in.

The revelations about COCOBOD are not new though.

The International Monetary Fund (IMF) bailout programme highlighted the challenges facing the sector.

The promised COCOBOD Turnaround Strategy was never delivered.

And with a new government in place, it remains to be seen whether this legacy problem will be taken up.

Whatever the case is, sooner rather than later, what to do about the organisation’s debt and its operational efficiency would need an answer.

What are the viable options?

Option 1 – Maintain state control?

The State exercises different levels of control across the cocoa value-chain in terms of all the key decision points.

Who does what, when and how varies depending on where the decision is being made.

At the stage of ownership (who do cocoa farms belong to, for example) and the production phase (growing, harvesting, drying the beans, etc.) the level of state control is almost non-existent.

The answer to who does what, when, and how, is left largely to private actors – cocoa farmers.

Even at the production phase where there is state involvement, it is not to control the decision-making points but to provide support to a sector.

This changes though when it comes to the decision point of marketing and export.

Here, The State flexes its full muscle and enjoys an almost monopoly over the marketing and export of cocoa [PNDC Law 81, Under S.4 (6)] In particular, the State determines the producer price of cocoa, an exercise which in the 4th republic has been subjected to our partisan politics over the question of a fair and adequate price.

Is the current fiscal situation the result of an institutional arrangement that gives the State this marketing and export monopoly?

Is the lack of operational efficiency simply a matter of poor corporate practices? Is it possible to maintain state control and improve operational efficiency, including turning around the fiscal situation of COCOBOD?

These are questions that must be answered earnestly.

Option 2 – Full liberalisation

The solution, often proffered, when public corporations such as COCOBOD appear to face the kind of challenges described in both the SONA and FY 2025 budget is privatisation. In the coca sector, the debate has been whether to fully liberalise in a way that allows private actors to participate not just at the point of production (growing and harvesting cocoa) but also during the marketing and export.

There are private actors involved, but that is restricted to the internal marketing of cocoa. Essentially, private buyers (Licensed Buying Companies) can purchase cocoa directly from the farmers but on behalf of the State.

The law also states that “it is cocoa which is the property of COCOBOD; or·

It is cocoa which has been graded and sealed, the export of which has been authorised in writing by the certifying authority of the Board.”

But it is also clear that the State still exerts control.

What will a fully liberalised sector look like? The State will cede control over the marketing (internal or external) and export of cocoa.

More importantly, the practice of the State determining the producer price of cocoa will cease.

Price determination will be based purely on market factors.

Which way forward?

During my dissertation research, I spoke with policy makers including a former minister of finance who made it very clear to me that they did not foresee a future where the State completely gives up control of the cocoa sector.

I have come to believe over the years, with governments changing, that what I discovered during my research is true.

The State is unwilling to cede control over the cocoa sector, especially when it comes to the entire marketing and export value chain. I am therefore very skeptical that Ghana will see a fully liberalised cocoa sector.

But that still leaves the problem of how to improve COCOBOD’s efficiency unresolved.

What about a competitor to COCOBOD? By that I mean, changing the rules of marketing and export to allow a private entity to emerge, independent of state control and is legally permitted to set price, buy, and export cocoa, etc.

This gives farmers a choice of not only selling to state-approved license buying companies but also of price options.

Maybe, opening the sector fully where there is real market competition is the jolt COCOBOD needs to improve operational efficiency and turn its fortunes around.