The socio-economic impact of the liberalization of the internal marketing of cocoa in Ghana

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Date
2000-02-01
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Abstract
The adoption of liberalization policy as a means of strengthening the efficiency of public sector institutions and systems has been the hallmark of the country’s economic reform programme. In 1993 the Government through the Agricultural Sector Adjustment Credit Programme re-introduced competition into the internal marketing of cocoa. This policy was aimed at eliminating the waste in the monopsony buying of cocoa by the Produce Buying Company Limited (PBC) and improves the operational and financial performance of the internal marketing system. It was expected that the Licensed Buying Companies (LBCs) would pay higher producer prices to farmers and improve their marketing services through competition. The motivation behind this research is that if cocoa should continue to play its mothering role for the nation, there is the need to adopt a marketing system that would be sustainable and eventually increase the wealth of the nation. The study was therefore intended to determine the extent to which the objectives as outlined in the liberalization policy have been achieved and the contribution made towards the socio economic development of the farmer, the rural community and the country in general. This is the challenge that faced this research work. The study began with a review of literature of internal marketing system which provided background information about the structure of marketing arrangements as practised in Ghana over the years and the market structure and cocoa sector experiences of other cocoa producing countries. The fieldwork of the study employed questionnaire administration to obtain primary data from farmers and LBCs. The data was subjected to multi-variate technique of analysis to arrive at the benefits accrued to the farmers and their community through the competition and the problems that faced the system currently. A review of secondary information extracted from Cocoa Board records was also carried out to determine the impact of the system on the industry and the economy in general. The results of the analysis of the data showed that farmers have benefited from the policy in terms of: (i) Prompt purchase and payment of produce. (ii) Financial incentives like credit scheme and short term loan. (iii) Other farmers support scheme. (iv) Community improvement projects. The industry and the economy were found to have benefited by way of quick evacuation of cocoa to take over points, operational efficiency and cost savings. However, the operation of the competitive market as practised currently was found bedeviled with some problems which included embezzlement of cash meant for cocoa purchases, theft of cocoa at farmgate and purchase of low quality cocoa by some LBCs. Finally, the study ended with recommendations for the effective management of the internal marketing system.
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A thesis submitted to the Board of Postgraduate Studies, Kwame Nkrumah University of Science and Technology, Kumasi, in partial fulfilment of the requirements for the award of Master of Arts Degree in Industrial Management, 2000
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