Cocoa Governance Crisis: Why Ghana Must Treat Cocoa as a Business, Not Politics

Introduction: The Paramount Chief’s Prescription

The lifeblood of Ghana’s rural economy and a cornerstone of its export revenue is in distress. For decades, the nation’s beloved cocoa sector has been plagued by chronic low farmgate prices, persistent farmer indebtedness, and concerns over long-term sustainability. Against this backdrop of a deepening cocoa crisis, Nana Aduna II—a prominent farmer, Paramount Chief, Spokesperson for the Ghana National Cocoa Farmers Association (GNACOFA), and Chief Executive of Ohene Cocoa Ltd—has issued a stark and transformative diagnosis. His prescription, articulated in a pivotal televised interview, is radical in its simplicity: cocoa must be handled as a firm, no longer as politics. This statement transcends rhetorical flourish; it is a direct challenge to the foundational governance model of Ghana’s cocoa industry, centered on the Ghana Cocoa Board (COCOBOD). This article will deconstruct Nana Aduna II’s argument, explore the historical and structural context of cocoa governance in Ghana, analyze the multifaceted crisis, and provide a clear, SEO-friendly, and pedagogical roadmap for the much-needed cocoa sector reform that aligns with global best practices for sustainable cocoa production.

Key Points: Decoding the Call for Business-Like Management

Nana Aduna II’s intervention crystallizes several critical, interconnected failures within the current system. The following key points, derived directly from his statements and the broader discourse, form the core thesis for systemic change.

1. The Fundamental Identity Crisis of COCOBOD

At the heart of the dysfunction is a profound ambiguity over the Ghana Cocoa Board’s core function. Is it a regulator, a trader, a price setter, or a price competitor? Nana Aduna II highlights comments from former ministers describing COCOBOD as a “trading institution,” underscoring a dangerous mission creep. This role confusion prevents clear accountability, stifles private sector efficiency, and creates conflicts of interest that undermine the sector’s commercial viability.

2. Political Instrumentalization vs. Commercial Imperatives

The paramount chief draws a direct line between the sector’s woes and its treatment as a political tool. Politicizing cocoa—using it for patronage, short-term electoral gains, or as a vehicle for non-commercial objectives—diverts it from the disciplined, long-term planning required of any successful agribusiness. As he asserts, “Cocoa is a business.” Recognizing this truth is the first step toward recovery.

3. The Illusion of Local Processing and Foreign Dependency

While official discourse celebrates the target of processing 50% of Ghana’s cocoa locally, Nana Aduna II questions the ownership structure behind this figure. He contends that very little of this processing is in “Ghanaian hands,” leaving the nation “locked into foreign issues.” This points to a failure in industrial policy that ensures value addition does not translate into genuine local capital formation, technology transfer, or economic resilience.

4. Alignment with International Financial Institution (IFI) Prescriptions

Significantly, the speaker notes that institutions like the International Monetary Fund (IMF) and the World Bank have long identified structural flaws in the cocoa value chain. Their consistent advice has leaned toward market liberalization, reducing state overreach, and enhancing regulatory clarity—precisely the directions implied by treating cocoa as a business.

Background: The Evolution of Ghana’s Cocoa Governance Model

To understand the urgency of reform, one must appreciate the historical architecture of the Ghanaian cocoa sector. This background explains how the current system, once a source of pride and stability, became a potential impediment to growth.

The Genesis and Mandate of COCOBOD

Established in 1947 as the West African Cocoa Research Institute and later formalized as the Ghana Cocoa Board, COCOBOD was born from a need to stabilize a volatile global commodity market and protect farmers from exploitative private traders. Its original mandate was multifaceted: to regulate the industry, provide research and extension services, control quality, and act as the sole buyer and exporter of cocoa beans. This vertically integrated, state-dominated model was common in post-colonial Africa and succeeded in bringing order and generating significant state revenue for decades.

Ghana’s Stature in the Global Cocoa Economy

Ghana is consistently the world’s second-largest producer of cocoa beans, after Ivory Coast, contributing approximately 20-25% of global supply. The sector employs over 800,000 smallholder farmers and supports millions more through ancillary activities. Cocoa has historically been a top foreign exchange earner, making its governance a matter of national economic security. However, this status coexists with persistent challenges: low productivity (averaging 400-500 kg/ha compared to 1,000+ kg/ha in best practices), aging tree stocks, and vulnerability to climate change and pests like the Cocoa Swollen Shoot Virus.

Previous Reform Attempts and Their Limitations

Reform is not a new concept. The 1980s and 1990s saw Structural Adjustment Programs (SAPs) imposed by the IMF/World Bank, which forced some liberalization, including the licensing of private buying companies. However, COCOBOD retained its dominant role as the primary buyer, regulator, and price setter. This half-liberalized model created a hybrid system where private actors operated within a framework still heavily controlled by a state entity with conflicting interests. Subsequent initiatives like the Cocoa Sector Development Strategy and the Ghana Cocoa Board (Amendment) Act, 2020 have made incremental changes but have not resolved the core issue of mission overlap and political interference.

Analysis: Deconstructing the “Politics” in the Cocoa Sector

Nana Aduna II’s assertion that cocoa is being mishandled as a political device requires a dissection of what “politics” entails in this context and how it concretely damages the sector’s commercial health.

Political Pricing and the Farmgate Price Paradox

The annual determination of the farmgate price is the most visible politicization. While ostensibly based on a pricing formula tied to international market rates, the final decision is a high-stakes political act. Governments often set prices above the formula’s recommendation in election years to curry favor with the powerful farmer lobby, regardless of market realities or COCOBOD’s financial health. This creates a cycle: an unaffordable price leads to COCOBOD accumulating massive debts (running into billions of cedis), which are eventually bailed out by the state, creating moral hazard and distorting the true economics of cocoa production. A business would set a price that covers cost of production, ensures a reasonable margin for all actors (including the regulator), and is sustainable without perpetual subsidies.

Appointment and Accountability Gaps

The leadership of COCOBOD, including its Chief Executive and Board members, is appointed by the President, often with consideration for political loyalty rather than agribusiness expertise. This politicization of top management erodes meritocracy and long-term strategic planning. A private firm’s board is accountable to shareholders for performance; COCOBOD’s leadership is primarily accountable to a political appointer, creating a principal-agent problem where sector performance can be secondary to political compliance.

Regulatory Capture and Conflict of Interest

When a single entity is both the principal regulator (setting standards, licensing buyers, monitoring quality) and the dominant market participant (buying and exporting the majority of beans), the potential for regulatory capture is immense. COCOBOD can, consciously or not, use its regulatory power to stifle competition from private licensed buying companies (LBCs) or to create advantages for its own commercial interests. This chills innovation and efficiency in the buying and logistics chain.

Comparative Lens: The Ivory Coast Model

Ghana’s neighbor, Ivory Coast, the world’s top producer, operates a different model. While its Conseil du Cacao et du Café (CCC) is also state-led, it has historically been more commercially aggressive and less encumbered by the direct political price-setting drama seen in Ghana. The Ivorian system, while not perfect, has often been cited for its relative stability and ability to mobilize resources for sector investments. The contrast highlights that state involvement is not inherently flawed, but the specific Ghanaian configuration of roles is.

Practical Advice: A Blueprint for Treating Cocoa as a Business

Moving from diagnosis to prescription requires concrete, staged actions for various stakeholders. The goal is not necessarily full privatization, but a clear, unambiguous separation of functions and the injection of commercial discipline.

For Policymakers and Government: The Unbundling of COCOBOD

The most critical step is a legislative and operational unbundling of COCOBOD.

• Create a Pure Regulator: Establish an independent Ghana Cocoa Regulatory Authority (GCRA). Its sole mandate would be licensing and supervising all buyers (including any state-owned entity), setting and enforcing quality standards, overseeing the sustainability of the farming system, and managing the research and extension portfolio. Its leadership should be based on technical merit and fixed terms, insulating it from electoral cycles.
• Commercialize the Trading Function: The current commercial buying and exporting arm of COCOBOD should be transformed into a competitive, state-owned commercial entity—Ghana Cocoa Marketing Company (GCMC)—or fully privatized. This entity would operate on strictly commercial grounds, competing with private LBCs on price, service, and efficiency. It would no longer set policy or regulate its competitors.
• Depoliticize Price Setting: Institute a transparent, formula-based farmgate price mechanism published in advance of the crop season. The formula should be a transparent function of the previous season’s average international price, a defined cost of production index, and a margin for all actors. The final sign-off could be given by an independent committee comprising the GCRA, the Ministry of Finance, and farmer representative bodies, removing it from direct presidential decree.

For the Private Sector and Farmer Organizations: Building Capacity and Ownership

• Empower Farmer Cooperatives: Facilitate the consolidation of farmers into viable, professionally managed cooperatives. These can then become significant shareholders in local processing companies or even own their own primary processing facilities, moving beyond mere outgrower schemes to genuine equity participation.
• Promote Local Processing Champions: Design fiscal and credit incentives (e.g., tax breaks, access to long-term dollar loans) specifically for Ghanaian-owned processing ventures, not just foreign-owned ones meeting a local content requirement. The goal is to build local capital and intellectual property in