Amid the current cocoa sector challenges, the efficiency of the government institution mandated to manage the affairs within the very critical sector, the Ghana Cocoa Board (COCOBOD), is coming into question.
A section of the public believes that the COCOBOD cannot be exonerated from this crisis. These critics believe that over the years, COCOBOD has failed to master its own industry, playing a role in the persistent challenges, of which innocent farmers are paying the price.
Many people are raising concerns over a number of issues that can be described as the “sins” of COCOBOD, leading to the current crisis. Let’s take a look at some of them.
The Failure to Read the Market
When cocoa prices are high on the international market, optimism spreads quickly across Ghana’s cocoa sector. As expected, when they fall, the pain is just as swift.
From basic Economics or ECO 101, that is the nature of commodities. Global cocoa prices rise and fall in cycles driven by supply, demand, weather patterns, currency movements, speculative trading, and even geopolitics. They never stay elevated forever.
History has shown that every boom is followed by a correction. The business cycle in economics has always been “a boom and a bust”. The real test of management is not how institutions behave during the boom, but how prepared they are for the slump. It appears COCOBOD has failed to appreciate this long-standing economic principle with commodity and hence leading to the next inefficiency.
The Failure to Build Buffers During Boom Periods
The current turmoil surrounding the Ghana Cocoa Board (COCOBOD) has reopened a long-standing debate. Why didn’t COCOBOD build buffers during the windfall years to prepare for today’s downturn?
In the last couple of years, cocoa prices rose to about $12,000 per tonne before deflating to the current $4200 per tonne.
What did COCOBOD do during the booming price period? It was expected that they would have kept some reserves or a stabilization fund as insurance for a future downturn. Such a stabilization fund, if was kept, would have protected the farmers. At least, it would have been able to keep them at the prevailing farm-gate prices without necessarily slashing them down.
In effect, the farmers are paying for the inefficiencies of the market regulator.
The Politicisation of the FOB Price to Farmers
Critics argue that successive governments, not just the present one, have repeatedly politicised the producer price, particularly the Free On Board (FOB) price, often promising sharp increases during election cycles without adequate regard to global price volatility.
In times of rising international prices, pressure mounts to announce generous producer price hikes. During election periods, political parties, as part of their efforts to win the hearts of electorates promises huge FOB prices without recourse to critical factors.
The experts agree that the promises are politically attractive; however, economically, they could be suicidal. This is riskier if those prices are locked in without adequate hedging or reserve buffers.
On this subject, this is what an ardent watcher of the industry, Francis Owusu Achampong, has to say “We foresaw the danger in promising to pay GHS. 7000 per bag at a time when the international market price was rising. Then, out of amateurish euphoria, somebody chose to ride on that to incredulously promise over 100% increases in prices in the hope of political advantage in elections. Then the people responded and gave you the mandate. So, is someone telling me that they were not aware that commodity prices never stay stagnant? Then you rush to reject forward pricing in the hope that the then prevailing high spot market pricing would endure. That bad strategy is a huge part of the current crisis, if we make room for other core problems bedevilling Cocobod. So, we shall not waste time sympathising with the Finance Minister. He should go back to the electioneering campaign days when he chose mischief over wisdom.”
The experts explain that forward pricing and hedging mechanisms exist precisely to manage such risks. When used prudently, they help stabilise revenues and reduce exposure to sudden market corrections. But when optimism overrides caution, institutions can find themselves exposed when the cycle turns.
The result is what cocoa farmers are experiencing today: a painful adjustment when global prices retreat. Yet, the deeper question goes beyond this season’s price cut. It goes to the core purpose of a marketing board.
Departure from the Marketing Board Concept and Other Inefficiencies
The marketing board concept was designed to smooth out volatility. It was to save during boom years and deploy those savings during lean years. In theory, windfalls should build reserves. In practice, those buffers appear insufficient today.
If significant reserves had been accumulated during periods of exceptionally high prices, farmers might not be absorbing the full shock of the downturn. Stabilisation funds could have cushioned incomes, maintaining predictability in cocoa-growing communities.
Instead, structural inefficiencies have long plagued COCOBOD. These inefficiencies manifest in rising operational costs, procurement concerns, administrative overheads, and mounting debt burdens. When windfalls are consumed by inefficiencies rather than saved, the system becomes fragile.
And fragility becomes visible only when the tide turns. It must be put on record that this is not an issue unique to one administration. Over the years, governments of different political colours have faced the same temptation, responding to immediate political pressure rather than long-term market realities. Commodity cycles did not start yesterday. They are as old as global trade itself.
A Truly Efficient COCOBOD
An efficiently managed COCOBOD would treat price booms as temporary, not permanent. It would build buffers quietly while optimism is high. It would avoid overpromising based on peak spot prices. And it would prioritise technical risk management over political advantage.
The present crisis, therefore, is not just about falling prices. It is about whether Ghana’s cocoa management framework has truly functioned as a stabiliser, or whether it has too often amplified cycles through political decision-making.
If reserves had been built consistently during windfalls, today’s price slump might have felt less severe.
