Export performance and macro-linkages: A look at the competitiveness and determinants of cocoa exports, production and prices for Ghana

This study presents an analysis of Ghana’s performance in export of cocoa using the revealed comparative advantage and revealed symmetric comparative advantage measures of competitiveness for the periods 1964-69 (immediate years following the collapse of world price of cocoa), 1983-92 (Reform and Adjustment Period) and 2000-2010 (recent decade). In addition, the magnitude and effects of key economic determinants of cocoa exports, production and farm gate price for Ghana are estimated. RCA and RSCA figures computed in the current study show that Ghana has comparative advantage in export of both raw and processed cocoa, with its advantage being higher in exports of the raw product. Ghana’s performance in export of cocoa has improved significantly since 1983. This observation is attributed to initiation of the Economic Recovery Program in 1983(which created the right conditions for agricultural investment and helped address inefficiencies in marketing and fiscal disciplines), the Agricultural Services Rehabilitation Project (ASRP) between 1987 and 1990 (which helped in strengthening the capacity of agricultural research, extension and policy planning), opening up of the domestic market to competition through partial liberalization of internal marketing from the early 1990s, establishment of a price stabilization system and continuous government support to the sector through increased public spending on infrastructure and productivity-enhancing innovations. Improvement in the export performance, anticipated increases in global demand and world price of cocoa, wide yield gap of Ghana, positive attitude of farmers towards supply of cocoa due to increased government support, and intensification of competition on the domestic market indicate potential for further improvement in Ghana’s production and export of cocoa. However, upon estimates obtained in the current study, to realize any further improvement in the performance of the cocoa subsector, measures should be put in place to bridge the wide yield gap, ensure continuous government support to various stakeholders in the supply chain, and tighten the loose border between Ghana and Côte d’Ivoire to help minimize smuggling in times of increasing farm gate price of cocoa in Côte d’Ivoire