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What Does Liberalization without Price Competition Achieve? The Case of Cocoa in Ghana

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  • Vigneri, Marcella
  • Santos, Paulo

Abstract

The deregulation of Ghana’s domestic cocoa supply chain that took place in the early 1990s was expected to bring competition among different private buyers and to generate a number of production incentives to the farmers. Most notably, it was expected that competition would emerge by means of price bonuses and/or premiums over the guaranteed price. However, this paper finds that price based competition mechanisms did not develop in the resulting domestic cocoa value chain. Rather, the now increasing numbers of Licensed Buying Companies compete for cocoa supplies based on the provision of different services to farmers. The availability of a number of outlets offers farmers the option to choose among those that can provide cash as well as credit. The cash payment and credit for inputs offered to attract cocoa sales mainly benefit liquidity-constrained farmers, enabling them to invest in productive inputs. Since cash constrained farmers are likely to be the poorest as measured by simple welfare indicators, liberalization may be seen to have had a progressive impact on Ghana’s cocoa farmers.

Suggested Citation

  • Vigneri, Marcella & Santos, Paulo, 2009. "What Does Liberalization without Price Competition Achieve? The Case of Cocoa in Ghana," 2009 Conference, August 16-22, 2009, Beijing, China 51660, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae09:51660
    DOI: 10.22004/ag.econ.51660
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    References listed on IDEAS

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    1. Besley, Timothy, 1995. "Property Rights and Investment Incentives: Theory and Evidence from Ghana," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 903-937, October.
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    Cited by:

    1. Alhassan, Mustapha & Gustafson, Christopher R. & Schoengold, Karina, 2017. "Effects of Information Framing on Smallholder Irrigation Farmers’ Willingness to Pay for Groundwater Protection: The Case of Vea Irrigation Scheme in Ghana," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258432, Agricultural and Applied Economics Association.

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