The role of cocoa in Ghanas growth and poverty reduction Clemens - - PowerPoint PPT Presentation

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The role of cocoa in Ghanas growth and poverty reduction Clemens - - PowerPoint PPT Presentation

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INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Ghana Strategy Support Program sustainable solutions for ending hunger and poverty The role of cocoa in Ghanas growth and poverty reduction Clemens Breisinger, Xinshen Diao Shashidhara Kolavalli

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INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

sustainable solutions for ending hunger and poverty

Ghana Strategy Support Program

The role of cocoa in Ghana’s growth and poverty reduction

Clemens Breisinger, Xinshen Diao Shashidhara Kolavalli November 19, 2007 Accra, Ghana

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Ghana Strategy Support Program

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

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Outline

  • Cocoa in recent economy-wide growth
  • Cocoa in poverty reduction
  • Cocoa for reaching MIC status
  • Future challenges for the cocoa sector
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Ghana Strategy Support Program

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

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The role of cocoa in economy-wide growth

  • Production increased from 395,000 MT in 2000 to 740,000

MT in 2005 and

  • Cocoa producer price increased
  • Share of cocoa in GDP rose from 4.9% in 2000-2004 to

8.1% in 2005/2006

  • Cocoa accounted for 22.6% of AgGDP (with forestry and

fishery) or 28.5 % (without forestry and fishery)

  • Cocoa contributed 28% to agric growth (excluding forestry

and fishery)

  • Cocoa exports constituted 28% of foreign exchange

earnings, 57% of overall agricultural exports, and 87% if forestry and fishery are excluded

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Ghana Strategy Support Program

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

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Trends of major cocoa indicators

50 100 150 200 250 300 2000 2001 2002 2003 2004 2005 2006

Index (2000=100)

Production

Area Yield Real producer price FOB price

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Ghana Strategy Support Program

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

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Economy-wide linkage effects of cocoa

  • Strong cross sector linkages through
  • Cocoa processing (milling and butter)
  • Food industry (beverages, bakery, etc)
  • Government revenue to support other sectors
  • Processed cocoa exports increased from 83.6
  • mil. US$ in 2004 to 152.9 mil. in 2006
  • 5% of government revenue coming from cocoa

export tax in 2005

  • Still, only 8-15% processed domestically
  • Mainly low value added
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Ghana Strategy Support Program

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

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The role of cocoa in past poverty reduction

Source: Wodon and Coloumbe, 2007

1991/92 1998/99 2005/06 Total population Poverty rate 51.7 39.5 28.5 Poverty gap 18.5 13.9 9.6 Cocoa producers Poverty rate 60.1 36.7 23.9 Poverty gap 23.3 9.4 6.0

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Ghana Strategy Support Program

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

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Projected future growth and poverty reduction in Ghana – the model results

10.0 14.0 18.0 22.0 26.0 30.0 2005 2007 2009 2011 2013 2015 450 550 650 750 850 950 MIC Base Base MIC

p.c. income (US$) poverty rate (%)

8% average annual growth necessary

Source: Breisinger et al. 2007

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Ghana Strategy Support Program

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

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The role of cocoa in reaching MIC

  • Agriculture will have to play a major role in

reaching MIC status

  • Cocoa continues to grow (at 6.4% annually), but

share in agricultural GDP falls slightly (to 15%)

  • Cocoa remains the most important export

agricultural commodity (60% of agric. exports by 2015)

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Ghana Strategy Support Program

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

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The role of cocoa in poverty reduction is likely to decrease

Source: Authors’ calculations based on GLSS5

Poor rural houseshold distribution by pc income quintile

5 10 15 20 25 30 35 40

Coast Forest

  • S. Savannah
  • N. Savannah

Total

1st qunitle 2nd quntile

Poor rural cocoa growing houseshold distribution by pc income quintile (19% of rural households growing cocoa) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 C

  • a

s t F

  • r

e s t S . S a v a n n a h T

  • t

a l 1st qunitle 2nd quntile

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Ghana Strategy Support Program

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

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Poverty will concentrate in the North among non-cocoa farmers

North Base 2015: 14.0% North

\

South North Current poverty rate 28.5% South Poverty rate 62.7% South Poverty rate 45.1% Poverty rate 35.1% MIC 2015: 9.5%

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Ghana Strategy Support Program

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

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Future challenges for the cocoa sector

  • Productivity growth has to become increasingly

important

  • Supply-side competition is likely to increase

(cocoa as a strategic or targeted commodity in

  • ther big cocoa export countries, e.g., Indonesia,

Cote d’Ivore, Nigeria)

  • World cocoa price is likely to decline
  • Barriers for growth in cocoa processing exports

remain (high tariffs in EU and US)

  • Increased import competition of food sector

(using cocoa as an input) in domestic market

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INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

sustainable solutions for ending hunger and poverty

Ghana Strategy Support Program

Thank you!

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Ghana Strategy Support Program

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

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2001/02

metric tons

1,021 - 5,000 5,001 - 25,000 25,001 - 50,000 50,001 - 100,000 100,001 - 181,865 no production

2002/2003

metric tons

913 - 5,000 5,001 - 25,000 25,001 - 50,000 50,001 - 100,000 100,001 - 276,587 no production

2003/04

metric tons

1909 - 5000 5001 - 25000 25001 - 50000 50001 - 100000 100001 - 419650 no production

Regional concentration of cocoa production