COULD CHINA’S ENTRY INTO COCOA PRODUCTION BENEFIT GHANA?

The cost we pay for being complacent

I am sure when we heard of China’s first export of 500Kg of cocoa beans to Belgium, we cringed asking ourselves, can China produce cocoa beans? Well, for me, I have rather wondered exactly what pride there is in being acclaimed as the second-largest producer of cocoa beans in the world when the producers of the beans are among the poorest in the world.  I am sure, by the heading of this article, most people who are well versed in economics (demand and supply) are likely to conclude how crazy I am to even think of this. This article with its title is to highlight how China’s entry into cocoa production, as a crown to ongoing threatening actions from stakeholders in the value chain, would finally wake Ghana up from her slumber and to now stop assuming that Ghana having the “conducive cocoa-growing environment” and the “premium-ness” of our cocoa beans production is anything to be proud of.  As reported by GhanaWeb, Ghana Cocoa Board says “we shouldn’t panic”. In this article, I will argue that China as a new entrant into global cocoa production isn’t only a threat to cocoa farmers’ livelihoods but also a huge threat to the sustenance of the Cocoa-related Foreign Direct Investment in Ghana, whose sponsors are not happy with the implementation of the Living Income Differential and the general cost of doing their business. Even though it is hard to be optimistic about improving cocoa farmers’ livelihoods now and in the future, I would conclude with advice for Cocoa Board to develop a strategy as a matter of urgency to carefully respond (not react) to this development for the benefit of our smallholder cocoa farmers and the millions of Ghanaians who depend on the cocoa sector for their livelihood.

The Threat of China’s Geographical Characters

It’s a cliché to even emphasize how competitive China is when they enter a particular market. But how competitive will they be in the cocoa sector? This is my analysis. In the cocoa Sector, market entry requires that you have access to a forest cover, irrigation and if you like, a proven record of afforestation. As indicated in Graph 1, China has the biggest forest cover, such that Ghana and Ivory Coast’s Forest cover joined together forms only 5% of China’s total forest cover.