Ghana: Lifeline for cocoa industry
africaonline.com
Accra Mail
15/10/2001
The cocoa industry has been the lifeblood of Ghana’s economy since independence on March 6,1957. In fact it is on record that most of the country’s infrastructure and the big mansions in the cocoa producing sectors of the country were built from the sweat of cocoa farmers.
Besides, almost all the well educated Ghanaians in and outside the country at one time or the other benefited from cocoa scholarship. That explains how cocoa has fueled the development of the country. But in the early 60s the fortunes of the crop had begun to drop due to official neglect. La Cote d’ Ivoire and Malaysia, which borrowed the technology from Ghana had surprisingly, overtaken the country in the both production and processing.
But the most daunting challenge to the commodity and for that mater the economy is the manipulation of the price on the international market. Over the years, the European market, which dominates cocoa consumption, had dictated the price and ensured that countries like Ghana that depends on cocoa for nearly 60 percent of her foreign exchange earnings never got a better deal.
In early 1998 cocoa prices, which had been projected to hit over 1700 pounds per ton, had at the end of the year been revised downwards to 800 pounds per ton due unpredictable market trends. By early 1999 the price had touched down to an all time low of 751 pounds. This emaciated the economy and overturned the development budget in 1999.
But that is not all. Cocoa is currently being threatened by the use of cocoa butter substitutes (CBS) and cocoa butter equivalent (CBE) by some chocolate and other confectionery manufacturers in Europe instead of using pure cocoa butter produced by Ghana. The reasons for introducing cocoa substitutes should be clear to cocoa producing countries by now.
Information available indicate that the use of these cheaper substitutes is estimated to replace the use of an equivalent of about 250,000 tons of real cocoa beans per annum, which would have serious financial losses to the economies of major cocoa producers like Ghana. Some experts have expressed fear that the situation could be disastrous if the United States and other confectionery manufacturers should follow the European example.
Against the backdrop of declining cocoa prices on the world market all it has to take is for Ghana Cocoa Board to rethink cocoa processing as a strategy to safe the industry from the uncertainties of the world market. Over the last couple of years several seminars have been held on this issue, but like the others, the recommendations are probably gathering dust somewhere.
During one of such seminars in 1999, the former Chief Executive of Ghana Cocoa Board, Mr. J.H. Newman pointed out that in the light of the dwindling fortunes of cocoa on the international market, it was incumbent on Ghana to find more uses for the product by encouraging local consumption. He said plans were underway to ensure that within the next years at least 20 percent of locally processed cocoa would be consumed in Ghana and other West African countries. "If we have no use for our cocoa beans, then those who need them will pay any price for them and toy with our economies," Newman said at the seminar.
The current government since assuming office on January 7, has showed a lot of commitment to boosting the cocoa industry. First, it embarked on a mass spray exercise to rid the cocoa farms of deadly diseases and increase the yield. It has also increased the producer price of cocoa and put various schemes in place to reward cocoa farmers. Just last week the Minister of Finance, Yaw Osafo Maafo directed that locally produced cocoa drinks should be served at public functions, lectures and workshops as a first step to making the industry sustainable in the wake of fluctuating world cocoa prices.
Speaking at the inauguration of the members of the board of directors of the Cocoa Processing Company the Finance Minister said, "there is also the need to develop domestic marketing by evolving strategies to increase local consumption of cocoa products and confectionery." Despite how laudable this idea is, it would take more than mere words to convince Ghanaians to change their foreign tastes. Since 1983 when the country introduced an unbridled trade liberalisation policy Ghanaians have developed the taste for anything that passes as a foreign good.
People prefer Lipton tea and other foreign beverages to local cocoa products. Perhaps, one area to take a critical look at is the pricing of cocoa products. Why is it that foreign cocoa products are cheaper than locally produced ones? Why is that Ghana and La Cote d’Ivoire process less cocoa than other small producers? Records show that African countries produced between 54.8 percent and 66.3 percent of world’s total output between 1990/91 and 1996/97. In the same period the world grindings of cocoa ranged between 2,283,000 metric tons and 2,795,000 metric tons.
Out of the total, those from Africa ranged between 8.4 percent and 10.6 percent. Ghana only contributed between 1.0 and 2.7 percent. For instance while Ghana currently processes 20 percent Malaysia processes about 70 of its total output into semi finished products. That is why the government’s plans to increase processing to 40 percent in the next three years is most welcome. The records also show that the consumption of cocoa in the world for the five year period 1990/91to 1994/95 ranged between 2,218,000 and 2,359,000 metric tons.
Out of these African countries consumed only 1.08 percent to 1.19 percent, while Ghana consumed a mere 0.04 and 0.05 percent. The legitimate question that flows from this trend is that if we will not consume cocoa who should consume so that we can earn foreign exchange? Cocoa industry watchers say local consumption in Ghana, and to a large extent Africa is disturbing considering the fact that West Africa alone produces half the world’s total production.
That is the more reason why Ghana has to increase processing and consumption. But another school of thought argues that local consumption may not necessarily sustain the cocoa industry because of the narrowness of the domestic market and the low-income levels. This school of thought probably raises more questions than answers about the future of the cocoa industry. |
