Policy think tank Africa Policy Lens (APL) has called for urgent structural reforms in Ghana’s cocoa sector, warning that current management practices risk deepening instability and hurting farmers.
Following the recent crisis in the sector, APL released a comprehensive paper outlining what it describes as practical steps to restore confidence and protect producers.
The paper highlights what APL calls the poor handling of the cocoa sector by COCOBOD, pointing in particular to the impact of government’s price reduction on cocoa farmers.
It says that price decisions and risk management failures have transferred financial shocks directly onto producers, many of whom rely solely on cocoa for their livelihoods.
To address these challenges, APL has proposed a set of structural reforms which it says should be treated as urgent.
One of its key recommendations is the establishment of an independent risk management framework within COCOBOD. The think tank proposes the creation of an autonomous commodity risk committee, staffed by market economists and hedging specialists, to oversee forward sales, price stabilisation strategies and exchange-rate assumptions.
According to APL, such a body would reduce political interference and strengthen technical decision-making.
The group is also calling for the creation of a statutory price stabilisation fund. It recommends that a cocoa stabilisation reserve be ring-fenced and legally protected to cushion farmers during downturns, rather than allowing volatility to be passed directly to producers.
Transparency is another major concern raised in the paper. APL is urging mandatory public disclosure of forward sales volumes, including the percentage of projected output sold in advance, hedging positions and realised price benchmarks before each crop season.
It believes this would improve accountability and rebuild trust in the system.
In addition, the think tank recommends the adoption of an exchange-rate neutral pricing formula. It argues that discretionary exchange-rate adjustments should be removed from farmgate pricing calculations and that producer prices should be tied strictly to realised Free on Board (FOB) contracts.
Finally, APL is pushing for stronger leadership accountability. It proposes the introduction of parliamentary oversight hearings linked directly to pricing outcomes and the financial performance of the cocoa sector.
According to the policy paper, these reforms are necessary to restore stability, protect farmers from avoidable shocks and ensure more professional management of one of Ghana’s most important economic sectors.
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Source: www.myjoyonline.com
