Cocoa Crisis: APL makes policy recommendations for urgent structural reforms

Policy think tank, Africa Policy Lens (APL), has called for urgent structural reforms to improve governance and ensure better management of Ghana’s cocoa sector.

The call follows the recent crisis in the sector, which has raised concerns about pricing, risk management, and financial sustainability. In a comprehensive policy paper, APL criticised the management of Ghana Cocoa Board (COCOBOD), citing what it described as poor handling of the cocoa industry’s financial and pricing mechanisms.

The paper detailed the impact of the government’s cocoa price reduction on farmers, arguing that the move transferred market volatility directly to producers. It further outlined measures aimed at restoring confidence, strengthening oversight, and protecting farmers from future shocks.

Five Key Reform Proposals

APL proposed five major policy interventions which it says should be considered as part of urgent structural reforms:

1. Independent Risk Management Framework

The think tank recommends the establishment of an autonomous commodity risk committee within COCOBOD. The committee, to be staffed by market economists and hedging specialists, would oversee forward sales, price stabilization strategies, and exchange-rate assumptions.

2. Statutory Price Stabilization Fund

APL is calling for the ring-fencing and legal protection of a cocoa stabilization reserve. The fund would serve as a buffer to cushion farmers during market downturns, rather than transferring price volatility directly to producers.

3. Mandatory Forward-Sales Transparency

The policy paper proposes mandatory public disclosure of forward sales volumes—expressed as a percentage of projected output—alongside hedging positions and realized price benchmarks before each crop season.

4. Exchange-Rate Neutral Pricing Formula

APL recommends removing discretionary exchange-rate adjustments from farmgate pricing calculations. Instead, producer prices should be strictly tied to realized Free on Board (FOB) contract values.

5. Leadership Accountability Mechanism

The think tank further proposes the introduction of parliamentary oversight hearings linked to pricing outcomes and the financial performance of the cocoa sector, to strengthen accountability at the leadership level.

Way Forward

According to APL, implementing these reforms would enhance transparency, reduce financial mismanagement risks, and restore stability within Ghana’s cocoa industry. The think tank maintains that without decisive structural changes, the sector could face recurring crises that threaten farmer livelihoods and national revenue.