Ghana Cocoa Industry - Essay Example

Ghana cocoa industry Ghana is no different from other African countries, which have agricultural driven economies. Half of Ghana’s population earns their income from the agricultural sector on either a formal or an informal basis. In addition, export of agricultural produce contributes to more than half of the country’s GDP. Staple food crops produced in Ghana include yams, rice, kola nuts among others; however, the crop that drives the economy is cocoa. Ranked as the second largest (Ivory Coast holds the supreme title) producer and exporter of cocoa, Ghana produces an estimated 830,000 metric tons annually (Ecobank, 2013). However, it is of great significance to note that output varies on an annual basis. Factors such as price fluctuations, politics, and management play a crucial role in influencing output. Discussed in this paper is the role of politics in influencing cocoa production in Ghana, and interventional strategies set up to boost production of cocoa in the country. In addition, the paper also analyzes the cocoa industry in Ghana from different theoretical perspectives. Political theory centers on the analysis of economics' influence on political ideologies. Tenants of the theory uncover the interplay of relationships between law, politics, and economics. In addition, it analyzes the development of various institutions in different economics and social systems for example, capitalist, socialist, and communist systems. Competing interests of specific individuals, groups or institutions affect a country's economic development. This theory enables individuals visualize and understand the formation of public policies. Small-scale farmers in Ghana lack the resources to export their produce directly. They rely on intermediaries (businesspersons) and the government to broker deals with customers interested in their produce. Herein, lays the root cause of the country's economic problem. These farmers receive meager compensation compared to the parties charged with the task of brokering the deal. As a result, poverty in Ghana is at an all-time high despite its flourishing cocoa industry. As mentioned, Ghana ranks second after Ivory Coast in the cocoa export industry (Ecobank, 2013). The country lost the title amidst waves of political upheaval in the country. In a bid to advance their personal interests, influential individuals mismanaged the cocoa industry. Through the Cocoa Marketing Board, farmers received fixed compensation for their produce. However, delayed payments, invalid cheque and bureaucracy within the board exploited the farmers contributing to the decline in production. Purging the system necessitated the dissolution of the board and privatization of cocoa's export industry. In 1984, the government effected reforms to the Ghana Cocoa Board, which succeeded the Cocoa Marketing Board. Unlike its predecessor, the new board was accountable for minimal responsibilities with the lion’s share of tasks assigned to the private sector. Production went up and is rising steadily over the years (Mises, 2008). Raul Prebisch developed the dependency theory in conjunction with his colleagues in the 1950s in his quest to understand why development in industrialized countries did not tally with development in poor, non-industrialized countries. According to the theory, economic growth in under developed countries results from exploitation from developed countries. Capitalist systems compel the development of rigid international division of labor sustained by cheap raw materials and labor from dependent states. Exploitation occurs in the form of political, social, and economic pressure. Political pressure transcends all other factors. For example, politicians in industrialized countries have the ability to impose monetary sanctions, and implement legislative directives, which directly affect the economic sectors of non-industrialized countries. In the case of Ghana, success in the exportation of cocoa is subject partly to international demand and pricing. High excise duty levied in industrialized countries, which are the major, importers of cocoa results in less imports. Ghanaian farmers face severe consequences, whereby they resort to selling their produce at low, unprofitable prices (Vincent, 2008). Proponents of political realism emphasize the role of competition and conflict in relationships formed between countries around the globe. Realists presume that all states are self-serving, which predisposes them to signing agreements that have higher chances of yielding desirable outcomes. States strive to safeguard their security, pursue national interests, and struggle for power and influence. Colonization of the African continent portrays the selfish nature of colonial powers, which scrambled for prime African countries endowed with natural resources and cheap labor. The colonialists failed to take into account the needs of the African natives despite invading their homeland. For example, they whisked away all able-bodied men and women during the slave trade era robbing African countries of their workforce. After 1959, Ghana began the long struggle towards rebuilding a nation devoid of elite, youthful citizens. Ghanaian leaders had no choice but to turn to their oppressors for financial aid, which they needed for developing infrastructure in the country. This culminated in a culture of dependence characterized by high foreign debt. Presently, Ghana lacks the infrastructure needed for processing cocoa. As a result, the country resorts to selling non-refined cocoa, which costs much less compared to finished, refined cocoa. Worsening the situation is the fact that the country imports the refined product at high costs (Stanford, 2010). On the other hand, tenets of regime theory differ from those of political realism. According to these theorists, unity is crucial in mitigating issues of global concern. They believe in the co-operation of sovereign states towards the achievement of a common goal. The states opt to pursue universal interests, safeguard international security and avoid overt power struggles guaranteed to antagonize other nations. Through seminars hosted by institutions that extend open membership to all interested parties, states find a platform for exchanging ideas. The agriculture sector in Ghana has and continues to benefit from such forums. These seminars are either local regional or international. Neoliberalism theory centers on free trade. According to these theorists, economic growth relies on unrestricted access to different markets (open markets) and economic liberalization. Due to globalization, countries are opting to minimize restrictions in order to enhance the free flow of information such as political ideologies, and technological advancement. Ghana continues to benefit from principles of neoliberalism. Through partnerships formed with other African states trade in the region has been enhanced. Leaders agreed to withdraw trade embargos, reduce excise taxes among others. Moreover, citizens are able to move through the porous borders with minimal documentation making labor accessible. However, negative consequences arose from the porous borders. For example, criminals smuggle cocoa through the porous borders decreasing the country’s exportation quota. Moreover, globalization led to an increase in the demand of cocoa production. Ghana’s labor force proved inadequate to meet the increased demand, which led to an increase in the exploitation of children. The rise in child labor in Ghana received negative backlash from the international community. Human rights organizations reprimanded these actions, which led the institution of harsh legal reprimands by the government (Boas & Huser, 2006). The concept of foodscaping encompasses the act of achieving an aesthetic agenda using plants. It provides the opportunity to grow a variety of crops with little human intervention as well as encouraging a reliable and sustainable food source. It develops a culture of self-reliance in terms of food from the most rudimentary of frontiers, our yards. This successively eases the food burden on the relevant authorities and nurtures collective responsibility in finding a solution to the food problem. The staple foods in Ghana include yams and rice, which are less profitable compared to cocoa. As a result, farmers neglect their production leading to food insecurity within the region (Nyantakyi-Frimpong, 2013). The Ghanaian government shoulders the burden of food insecurity; therefore, it is incumbent upon them to encourage farmers to grow staple foods. Foodscaping is an intelligent way of capturing farmers’ interest. Spatial colonization is the invasion of a different species of plants to an agricultural or farm area that is not originally indigenous to them. This could be encouraged by either natural or artificial factors that cultivated a suitable environment for the gradual and progressive onslaught of these foreign plant species. Cocoa is not indigenous to Ghana. Introduced by a foreigner, the cocoa plant adapted to Ghana’s rainforest environment. Presently, small-scale farmers in the region plant cocoa trees and reap their seeds for income sustenance. Research by scientists continues to provide strains that are resilient to changes in the environment resulting in increased output. The need to engage in rigorous research resulted from the decrease in cocoa production in the region in 1970s caused by diseases, aging trees among other factors. Hybrid cocoa plants such as the “forastero, criollo and trinitario”, prove more resilient increasing their popularity with the farmers (Breisinger et al, 2008). Differential profits or differential revenue refers to the expected increase or decrease in profits resulting from one course of action as compared to an alternative course of action. These two approaches are compared side by side, and the difference in consequent revenues obtained by implementation of both alternatives is what is known as the differential profit. The Ghanaian government opted to relinquish control of the cocoa industry by privatizing the industry. As a result, the differential profits were skewed in favor of privatization. Mercantilism is an economic system whose key aim was to maximize, unify and increase the wealth and power of a nation through strict government regulation. Such puritanical regulation usually targeted the nation’s commercial interests. The policies aimed at restraining imports via tariffs and maximizing exports in order to enrich the country. This form of economic nationalism geared towards achieving a favourable and positive balance of trade. It also assumed that majority if not all of the nation’s wealth depended on ownership of precious metals, a fact that contributed to its impracticability. In Ghana, mercantilism failed to produce desirable results. The Cocoa Marketing Board, which was the predecessor of the Ghana Cocoa Board adopted mercantilism. In the beginning, the system worked benefiting cocoa farmers in the region by subsidizing production costs (reduction of fertilizer, insecticides, equipment, and seedlings costs) and improved infrastructure. However, increased demand for production led to the crash of the system. The country lacked adequate technological advancements to keep up with the increased demands (MOFA, 2013). Food regimes help define clearly the role, development and growth of agriculture from the basic local level to the much larger global scale in line with industrialization of the region. In some ways, it is a politicized theory with the aim of emphasizing the strategic importance of agriculture. The geopolitical power gained from agricultural advancement further aligned with regional stability and prosperity to consolidate its significance. Due to cocoa planting, different states acknowledge Ghana’s role in its agricultural prowess. The cocoa industry continues to furnish small-scale farmers with an income designed to ease the burden created by the high living standards. In addition, farmers embraced technology, resilient hybrid cocoa plants, and advice given by researchers pertaining to cocoa production. This contributed to increased production of cocoa within the region earning Ghana international recognition (Breisinger, 2008). Commodification is the act of commercializing an inanimate or inanimate object as a product meant for sale or purchase. The objects in this case are usually those not considered as commodities and objects that everyone has a right to naturally. Commodification may also apply to ideologies and their consequent manifestations such as in works of art or poetry (Breisinger, 2008). In conclusion, cocoa production in Ghana stands to benefit from a stable political environment, and interventional strategies designed to boost production in the region. Politicians within the region have the mandate to institute legislative directives aimed at safeguarding the cocoa industry. Dealing with mismanagement of the boards affiliated with the cocoa industry harshly is part of the solution to challenges facing the industry. Privatization of the industry continues to yield favorable results as the different private entities tailor their activities towards cost minimization and profit maximization. In addition, analyzing the cocoa industry using different theoretical perspectives enables individuals to understand the challenges facing cocoa production in Ghana. For example, decisions made by the government that might appear unfavorable from the surface might have sub-surface favorability (Nyantakyi-Frimpong, 2013). References Boas, M., & Huser, A. (2006). Child Labor and Cocoa Production in West Africa. Norway: Allkopi AS. Breisinger, C., Diao, X., Kolavalli, S., & Thurlow, J. (2008). The Role of Cocoa in Ghana's Future Development . Ghana: International Food Policy Research Institute. Ecobank. (2013, October 13). Middle Africa Briefing Note: Soft Commodities :Cocoa. Retrieved from Ecobank: file:///C:/Users/bobo/Desktop/Momo/cocoa%20ghana.pdf Mises, L. V. (2008). The Theory of Political Economy. New York: Sage. MOFA. (2013). Ghana's Medium Term Agriculture Sector Investment Plan (METASIP). Retrieved from Ministry of Food and Agriculture Republic of Ghana: http://mofa.gov.gh/site/?page_id=2754 Neumayer, E. (2001). How Regime Theory and the Economic Theory of International Environmental Cooperation Can Learn from Each Other. Boston: Massachusetts Institute of Technology. Nyantakyi-Frimpong, H. (2013, August 14). Food Insecurity in Nothern Ghana: Policy Issues in Historical Context. Retrieved from Africa Portal: http://www.africaportal.org/articles/2013/08/14/food-insecurity-nothern-ghana-policy-issues-historical-context Stanford University. (2010, July 26). Political Realism in International Relations. Retrieved from Stanford Encyclopedia of Philosophy: http://plato.stanford.edu/entries/realism-intl-relations/ Vincent, F. (2008). Dependency Theory: An Introduction. In G. Secondi, The Development Economics Reade (pp. 58-64). London: Routledge. Read More