Ghanaian Goods: The Impact of Late 20th Century Cocoa Market Privatization on Ghana’s Cacao Farmers

Chocolate is purchased all over the world, but 75% of the cacao cultivated to make chocolate is produced in West African countries.[1] Ghana is second in the world in cacao production, only to Cote d’Ivoire, the top country producing cacao in the world.

Map_of_West_AFrica

Ghana and neighboring country Cote d’Ivoire

Cacao production in Ghana can be traced to the late 19th and early 20th centuries, as the Gold Coast transitioned from wealth accumulation through gold and slaves to cocoa.[2] During the 20th century, the Ghanaian national government heavily regulated the cocoa sector but experienced tension with the global market as international economic organizations like the World Bank and the International Monetary Fund (IMF) pushed Ghana to liberalize its cocoa market. Around 1979, the Ghanaian government initiated reform of the cocoa sector, established the Ghana Cocoa Board (reconfigured Cocobod), and supported intense privatization of the cocoa market. Over the past 30 years, these changes have had a serious impact on the well-being of local cacao farmers in Ghanaian areas. Using a historical analysis of Ghana’s economic changes during the late 20th century as well as a comparative analysis of the cocoa market between Cote d’Ivoire and Ghana, I argue that the privatization and liberalization of the Ghanaian cocoa market has been mostly detrimental to Ghanaian cacao workers today.

This analysis is important for multiple reasons. First, the legacy of the globalized economy’s effect on the Ghanaian cocoa market during the 20th century has had significant effects on the international chocolate market. Even though most cacao is cultivated in West African nations, most of the chocolate in the world is sold to other countries. Understanding the effect of late 20th century changes to the West African cocoa market both reveals incentives of global chocolate companies and exposes troubling inequalities between Ghanaian cacao producers and international chocolate consumers. Additionally, studying the globalized economy’s effect on the Ghanaian cocoa market illuminates layers that shape cacao production beyond local cacao farmers themselves. In the past two decades, new documentaries and investigative work have revealed the place of child labor and evidence of slavery in West African cacao farms.[3] This information has moved informed citizens and government officials to demand action in response to the exploitation observed here: one of the most prominent measures established in the United States was the Harkin-Engel Protocol, established by US Representative Eliot Engel and Senator Tom Harkin in order to push chocolate manufacturers to document any evidence of exploited child labor in the cultivation of their chocolate.[4] However, the understandably charged dialogue surrounding exploited labor has encouraged ideas of an “exploited/exploiter” binary that leaves no room to consider the effects of other layers of control in the cocoa market. Such layers include both national/governmental practices as well as local/community customs in cocoa production.[5] Analyzing the significant changes to the Ghanaian economy over the past few decades is crucial to understanding the condition of cacao laborers and moving past the exploited/exploiter binary often promoted by well-meaning and/or sensationalist accounts, in order to accurately evaluate the conditions of West African cacao labor.

Ghana’s economy has experienced trouble since last year. Due to factors such as government corruption and the 40% depreciation of Ghana’s cedi currency, Ghana’s cocoa economy has struggled as living costs have skyrocketed. This has had an adverse effect on Ghanaian farmers, who say that basic operational costs (such as the price of fertilizer) have increased significantly since 2011. In Ghana, cacao farmers are legally required to sell their beans only to purchasing clerks acting as intermediaries between farmers and Cocobod, Ghana’s state-run cocoa marketing board. However, despite Ghana’s economic troubles, Cocobod has not increased farmers’ compensation for cacao cultivation. This inaction, combined with both the economic struggles of Ghana’s low cocoa prices and the depreciation of the national currency, has led many farmers to illegally smuggle their cacao beans into Ghana’s neighbor, Cote d’Ivoire, the world’s number one cacao producer.[6] According to estimates, Ghana’s cacao output over the past 15 years peaked from October 2011 to September 2012, as cacao smuggling from Ghana surged during Cote d’Ivoire’s short-lived civil war. Unfortunately, the outlook for Ghana’s cocoa market is currently uncertain, as high inflation and the depreciation of the Ghanaian cedi continue to plague cacao farmers.[7]

The issues of Ghana’s current cocoa market and the farmer’s frustrations can be traced to changes to the cocoa sector during the late 20th century. During the 1970s, a military coup ended Ghana’s single-party system and brought Jerry Rawlings into political power. This ushered in a national reform of the cocoa sector, creating the Ghana Cocoa Board – Cocobod – and increasing privatization of cacao production.[8] Resisting pressures from the Western market to further liberalize, Ghana’s national government attempted to reject engaging with international economic agencies, such as the World Bank and International Monetary Fund (IMF), essentially “unplugging” from the rest of the world. However, this decision caused mass chaos as urban dwellers reacted to both the scarcity of imported food as well as the skyrocketing prices of locally produced food. Food riots became exceedingly common. Eventually, the Ghanaian national government turned back on its isolationist policies. In 1984, Rawlings engaged with the World Bank and devalued the national currency, freeing Ghana’s marketplace, attracting capital investment, and curing the crisis of goods availability in Ghana. This immediately decreased both inflation and the black market in Ghana.[9]

These achievements proved short-lived in the wake of Ghana’s current economic crisis. Despite the increased privatization of Ghana’s cocoa market as well as Cocobod’s relaxed influence on the private sector, Ghana experienced rising costs and depreciating currency value just last year. This can be traced to Ghana’s continued cocoa market liberalization through the 1980s and 90s. Cocobod increased cocoa produce prices from 1988 to 1990, but from 1992 to 1993, Ghana introduced quasi-private exporting firms in order to adhere to its agreements with the World Bank and IMF. Before this deregulation, Cocobod had a monopoly over Ghanaian cocoa, but afterward, multiple buying companies would compete over Ghanaian cocoa.[10] Despite these market-based advancements and optimism about Ghana’s growing economy, the value of cocoa in Ghana continues to decline. This led to the smuggling of cocoa into Cote d’Ivoire, in order to try to procure a better price for cacao beans. Even though the promise of privatization sustained Ghana’s cocoa economy through the late 20th century, increased costs and associated economic woes have challenged local cacao farmers. In a recommendation from Ecobank, the Pan-African Bank, recommenders suggested that Cocobod now needs to increase the fixed price of cacao for local farmers.[11] Suggestions like these demonstrate that solutions to Ghanaian cacao farmer compensation are moving in a different direction, away from the privatization that defined so much of the Ghanaian cocoa market.

Furthermore, a comparative analysis between the cocoa markets of Ghana and its neighbor Cote d’Ivoire demonstrates the current limitations that privatization has put on these markets. In Ghana, the cocoa market is primarily mediated through Cocobod, the state-run agency which controls prices and transactions for Ghanaian cacao trading. However, in Cote d’Ivoire, the government takes a much more laissez-faire approach, allowing private traders to mediate between local cacao farmers and the world economy.[12] The differing approach to the Cote d’Ivoire cocoa market can be traced to different economic changes in Cote d’Ivoire’s history. Whereas Cocobod continues to control Ghana’s cocoa economy, Cote d’Ivoire’s cocoa market underwent extreme liberalization in the early 2000s. The intense deregulation and privatization of Cote d’Ivoire’s market severely fragmented the cocoa sector, devastating the local cacao farmers.[13] Whereas Ghana retains the stability of Cocobod even in states of high inflation and devalued currency, Cote d’Ivoire suffers from a fragmented market that disenfranchises local cacao laborers.

Ghanaian cacao laborers face drastic challenges in the market for one of the most urgently demanded treats: chocolate. Unfortunately, pressures to privatize the industry from international economic groups and the world economy has proven ultimately detrimental to local Ghanaian cacao laborers. Despite the oversight of Cocobod, Ghana’s state-run cocoa market manager, the country was still pushed to liberalize its market during the late 20th century, creating volatile and unstable market conditions for the laborers. Likewise, a comparative analysis of Ghana and Cote d’Ivoire reveals a similar situation. Unlike Ghana’s relatively more stable cocoa market and the lasting presence of Cocobod, Cote d’Ivoire underwent extreme privatization of its country’s cocoa market, as well as continued pushes to liberalize through the early 2000s. Even though Ghana still had a considerably volatile market, Cote d’Ivoire experienced extreme fragmentation of its cocoa market, seriously isolating cacao laborers cultivating the beans. Fortunately, cooperatives have proven successful in supporting financial transactions between cacao laborers and the world market.[14] In final analysis, these effects demonstrate how extreme privatization has been detrimental to Ghana’s cocoa economy and should serve as a cautionary tale to future investors and policymakers.

[1] Sarah Lockwood, “Lecture 14: Exploiters or Exploited?,” from AAAS 119x: Chocolate, Culture, and the Politics of Food.

[2] Mikell, Gwendolyn, “Introduction,” xi, from Cacao and Chaos in Ghana

[3] Carol Off, “Dirty Chocolate,” from Bitter Chocolate: The Dark Side of the World’s Most Seductive Sweet, 139-142; Orla Ryan, “Child Labour,” from Chocolate Nations: Living and Dying for Cocoa in West Africa, 44.

[4] Off, 139-140.

[5] Sarah Lockwood, “Lecture 14: Exploiters or Exploited?”

[6] Anderson, Mark and McTernan, Billie Adwoa, “Ghana’s cocoa farmers turn to smuggling as profits dwindle,” The Guardian, August 13, 2014

[7] Ecobank, “Ghana: Cocoa sector is facing new challenges,” 23 July 2014

[8] Martin, “Lecture 15: Modern Day Slavery”

[9] Mikel, “Cocoa and Chaos: Global, National, and Local Relations,” 252.

[10] Grossman-Greene, Sarah, and Bayer, Chris, “A Brief History of Cocoa in Ghana and Cote d’Ivoire,” Payson Center for International Development, Tulane University, 10-11.

[11] Ecobank.

[12] Lockwood, “Lecture 23: Exploiters or Exploited?”

[13] Ecobank, 2.

[14] Janelle Richards, “Chocolate is a Bittersweet Way of Life in Ghana”

Works Cited

Anderson, Mark, and Billie Adwoa McTernan. “Ghana’s Cocoa Farmers Turn to Smuggling as Profits Dwindle.” The Guardian, August 13, 2014.

Ecobank. “Ghana: Cocoa Sector is Facing New Challenges.” July 23, 2014. http://www.ecobank.com/upload/20140723100236691535ay7ctp5kPP.pdf. Accessed May 5, 2015.

Grossman-Greene, Sarah, and Bayer, Chris, “A Brief History of Cocoa in Ghana and Cote d’Ivoire.” Payson Center for International Development, Tulane University. November 2009. http://npeclc.gov.gh/Downloads/A%20Brief%20History%20of%20Cocoa%20in%20Ghana%20and%20C%C3%B4te%20d%E2%80%99Ivoire.pdf. Accessed May 5, 2015.

Lockwood, Sarah. “Lecture 13: Exploiter or Exploited?” In AAAS 119x: Chocolate, Culture, and the Politics of Food. Accessed May 5, 2015.

Martin, Carla. “Lecture 14: Modern Day Slavery.” In AAAS 119x: Chocolate, Culture, and the Politics of Food. Accessed May 5, 2015.

Mikell, Gwendolyn. Cocoa and Chaos in Ghana. New York: Paragon House, 1989.

Mondo Magic. “English: Map of West Africa, where Energy for Opportunity Works.” Image. 2009.

Off, Carol. Bitter Chocolate: The Dark Side of the World’s Most Seductive Sweet. New York: New Press, 2008.

Richards, Janelle. “Chocolate Is a Bittersweet Way of Life in Ghana.” NBC News. May 5, 2015. http://www.nbcnews.com/nightly-news/chocolate-bittersweet-way-life-ghana-n212741. Accessed May 6, 2015.

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