Assessing the resilience of the cocoa value chain in Ghana

Type Report
Title Assessing the resilience of the cocoa value chain in Ghana
Publication (Day/Month/Year) 2016
Publisher Kwame Nkrumah University of Science and Technology, Kumasi
Food systems are constantly challenged by changing environments. Multiple factors, related
to economic instabilities, social insecurities and climate change can affect the functioning of
food systems. The Sustainable Agroecosystems Group at ETH Zurich conceptualized food
systems resilience in the context of various shocks (natural, economic, social and political).
In this study, the concept of food systems resilience is applied to assess the resilience of
processes (input supply, production, processing, retailing and consumption) of the cocoa value
chain in Ghana. The cocoa value chain is susceptible to various types of shocks (price
fluctuations, natural hazards, biological shocks, changes in governmental policies, etc.) which
can have detrimental impacts on the provision of sufficient and safe supply of cocoa. The data
for this study was gathered from November 2015 to February 2016 through literature analysis,
interviews with actors and experts of the cocoa value chain in Ghana as well as through a
stakeholder workshop.
The resilience assessment shows that the processes of the cocoa value chain were found to
have different levels of resilience. While there are some actors showing relatively high
resilience performance, others are less resilient to shocks. For example, governmental input
supply, internal marketing (responsible for purchases of cocoa from the villages) and
processing overall achieve higher than average resilience scores due to improved management
and planning, good access to information, sufficient financial capital and the use of insurance
to cover potential losses. Private input supply, transportation and food retail show a
heterogeneous resilience picture. On the positive side, all three of them rely on a dense
network of flexible small businesses scattered throughout the country. Activities of these
businesses are highly diversified and do not rely solely on cocoa. Input dealers sell a variety of
agro-chemicals, seeds and tools for various farming activities while hauliers transport different
commodities and often run repair garages and other small ventures. For food retailers, cocoa
products make up only a small proportion of the products they sell. The production of cocoa
(farming) shows the lowest resilience performance within the value chain because of high
dependency on income from cocoa, lack of planning and organizational skills as well as limited
knowledge of efficient farming practices.
Furthermore, the resilience assessment shows that low diversification is a major issue
throughout the value chain. First, many actors are characterized by an over-dependency on
cocoa as their main source of income. Second, the regulated organization of the cocoa value
chain decreases the diversity of supply channels between actors and reduces logistical
flexibility. Finally, many key activities such as quality control, internal marketing, research and
governmental input and extension provision rely on a single governmental body – Ghana Cocoa
Board (COCOBOD). As COCOBOD embraces key processes of the cocoa value chain and
performs various supporting functions, actors of the cocoa industry are essentially encouraged
to rely on its support during a shock. This leads to disincentives for developing alternative
resilience strategies.
Following the collection of the data for the resilience assessment, a stakeholder workshop was
held in Kumasi in January 2016 to identify interventions for building resilience in the cocoa
value chain in Ghana. The participants were representatives from different processes (input
supply, production, processing, retail and governmental experts) of the cocoa value chain.
They discussed ways and interventions on how to improve the resilience of the cocoa value
chain against specific shocks and risks, such as droughts and world cocoa price fluctuations.
The participants were split into two groups. Input suppliers, farmers, NGO representatives as
well as some governmental experts focused on the ability of the cocoa production to withstand
droughts. Stakeholders that are involved in processing, trade, retailing and consumption
looked at how to make the post-production of the value chain more resilient against price
Overall, early warning systems for droughts were found to be important to ensure the
production of cocoa is upheld at all times. For the risk of world price fluctuation of cocoa,
alternative income sources were identified to be important for all stakeholders representing
the post-production processes of the cocoa value chain in Ghana. Furthermore, savings,
insurance protection and self-organization were other interventions seen by a large number of
stakeholders to be beneficial for building resilience against droughts and world price
fluctuations of cocoa.

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