Ghana: The effects of market reforms in the cocoa industry

Cocoa is Ghana's most important agricultural export commodity and the major source of income for nearly 700,000 small farmers. During the 1990s Ghana started to liberalise its economy by removing input subsidies and introducing licenses that allowed companies to buy produce directly from farmers. Generally, the increase in cocoa production over the last decade is seen as a result of these market reforms. But did poor farmers lose out in this process? Research from the Centre for the Study of African Economies at the University of Oxford, UK studied changes in the cocoa sector in Ghana since the early 1990s to identify who gained from the reforms. It found that the overall increase in production levels does not reflect the fact that poor farming households are not better off. While large farmers could improve production due to the use of pesticides or fertilisers, higher production costs constrained many poor farmers.