The political economy of pricing and Ghana’s cocoa marketing system

Literature review

Macroeconomic challenges that result from the over-reliance on primary commodity exports for the generation of foreign exchange and revenues are well documented; see, for example, Corden (1984), Deaton (1999), Nissanke (2019). These challenges arise from the cyclical nature of commodity prices due to alternating episodes of over- and under-production (Maizels, 1994). In addition to their cyclical nature, commodity prices are highly volatile. Many primary commodities are traded as an asset class on derivative markets in the global financial centres, adding volatility through fast trading and quick translation of information, expectations, beliefs, fads, and sentiments into prices.

This price volatility immediately translates into volatile revenues, incomes, exchange rates, and domestic price levels (inflation) for commodity exporters, especially for the exporters of commodities that are referenced against derivative market prices. The importance of commodity prices for the macroeconomic stability and developmental trajectory of primary commodity export-dependent economies has been highlighted by economists since the early 1950s. Prebish (1950) and Singer (1950) independently identified declining terms of trade ⁶ for commodity exporters as a key development challenge of the newly independent nations, whose economies were largely set up for primary commodity production. The observation of unequal pricing between primary commodities and manufactured goods also motivated the unequal exchange theories developed by Emmanuel (1972) and Amin (1974).

While authors differed on the explanations for the phenomenon of declining terms of trade, the empirical observation of unequal remuneration for goods exported by countries in the Global South (periphery) and the Global North (core) emerged as a central theme of a set of theories which became known as dependency theories; see Kvangraven (2020) for a review. The concept of commodity chains, which underpins today’s GVC analysis, was originally developed as an analytical tool within the tradition of the world system theory of the 1980s, which itself is associated with the dependency theory scholarship (Hopkins and Wallerstein, 1977, 1986). Later authors adopted the chain analogy but replaced the theoretical underpinning with different theoretical traditions from management, international business studies, sociology, and new institutional economics, merging into today’s GVC scholarship (Bair, 2005).

Gereffi (1994, pp. 96-7) introduced the concept of ‘governance structure’, which became a core theme in the evolving GVC literature. He defines governance as ‘authority and power relations that determine how financial, material, and human resources are allocated and flow within the chain’ (ibid.). Power is exercised by what Gereffi (1999) calls the ‘lead firm’ in the chain, which controls access to major resources that generate the most profitable returns. These lead firms can decide over the inclusion (or exclusion) of less powerful actors and constrain less powerful actors to lower value-added activities (Raikes et al., 2000). The second iteration of the governance framework by Gereffi et al. (2005) highlights transaction cost economics as one of the three pillars that underpin their framework. They identify three variables – (1) the complexity of a transaction, (2) the ability to codify a transaction, and (3) the capability of suppliers – that explain the emergence of different GVC governance structures.

However, despite the central role of price in the determination of value creation and value distribution along commodity chains, the question of pricing, that is, where prices originate and by whom they are created, is not discussed within the GVC governance frameworks. The reason for this omission is its foundation in transaction cost economics. Prices are conceptualised as codified information or as signals of demand and supply conditions within a market exchange (Gereffi et al., 2005). Implicitly, price formation is seen as equivalent to price discovery, whereby prices reveal underlying market conditions. Prices, therefore, play a coordinating role by signalling over- or under-supply and remain exogenous to the individual exchange process. Although the GVC framework acknowledges price-setting power by monopolies and monopsonies, like transaction cost economics, the role of price beyond the market remains underdeveloped as governance structures are derived as the outcomes of lead firms’ economic optimisation processes in the presence of transaction costs. ⁷

The works by Bargawi and Newman (2017) and Staritz et al. (2018, 2023) seek to address this shortcoming and highlight pricing as a key variable in the understanding of value creation and distribution along commodity chains. Bargawi and Newman (2017) draw on sociological and institutional approaches to price to develop the price chain as an analytical framework for commodity price formation and transmission with applications to the coffee chain. Staritz et al. (2023) argue for the addition of price-setting power as a central scheme to the GVC approach to understand how price risk is distributed along the chain. They study cotton in South Africa (Staritz et al., 2018) and the West African cocoa chain specifically (Staritz et al., 2023).

This strand of literature emerged in the context of the financialisation of commodity markets debate (Mayer, 2012). A synchronous price rise and subsequent collapse across seemingly unrelated primary commodity derivative markets in the 2000s revived a debate about the impact of speculators on price formation in these markets and highlighted the importance of prices formed in derivative markets for pricing along commodity chains (Nissanke, 2012; Staritz et al., 2018). However, this centrality of derivative markets is commonly absent in primary commodities-based GVC studies. The above-cited studies that integrate pricing into GVC and commodity chain frameworks, therefore, turn to institutional and sociological approaches to price and stress the need to consider the interplay of institutional structures at different scales beyond the single point of exchange and the power relations embedded in these structures.

Among sociological approaches to price that are referenced by both Bargawi and Newman (2017) and Staritz et al. (2023), Beckert (2011) sees prices as the outcome of social and political forces. For him, transactions are embedded in ‘institutions, social networks and culturally anchored frames of meaning’, and prices are a result of this embeddedness of transactions (ibid., 757). The distribution of wealth, as the consequence of pricing, is therefore the outcome of the structures that shape transactions. Çalışkan and Callon (2009, 2010) distinguish between valuation and price, with valuation conventions shaping what is considered a fair price. They argue that price is the outcome of power struggles between valuation agencies (i.e. all actors that participate in defining and calculating value). Therefore, the price of any transaction is always relational as it is calculated and legitimised based on other prices.

Tool (2002) proposes an institutional theory of discretionary pricing drawing on Veblen’s theory of exchange. He defines the discretionary pricing process as the use of power by individuals to influence the monetary terms of exchange and observes that most ‘real world’ pricing processes are discretionary as large oligopolistic corporations administer prices which are determined by target rates of return to capital.

Building on Commons’s institutional economics and theory of transaction, Gloria and Palermo (1996) point out that the method of price determination is largely conventional and that pricing is an evolutionary and path-dependent process. They focus specifically on bargaining as a market-based process of price determination and one specific type of transaction within Commons’s framework. In reference to Commons’s work, they see economic power as a key factor in explaining different outcomes in bargaining transactions. Kaufman (2007) adopts Commons’s typology of transactions to specifically develop an institutional theory of price that reflects different pricing practices embedded in transactions. Akin to Gloria and Palermo (1996), he centres the bargaining transaction but also includes rationing and managerial transactions developed by Commons. We draw on Commons’ theory of transactions and Kaufman’s (2007) adaptation of this theory to pricing, but amend it to apply to the case of primary commodities.

For Commons, a transaction is the legal transfer of ownership (mode) in contrast to exchange, which is merely the physical transfer of a good or commodity (matter). Commons (1934) introduced the notion of ‘transaction’ as an antithesis to 19th-century economists, whom he accuses of wrongly conceptualising the price formation mechanism as a harmonic (equilibrium) relationship between man and nature. By focusing on exchange rather than transaction, those economists failed to account for the legal transfer, which, according to Commons, is a process characterised by conflict in a relationship between man and man. Specifically, Commons defines a transaction as:

‘[T]he alienation and acquisition, between individuals, of the rights of future ownership of physical things, as determined by the collective working rules of society. The transfer of these rights must therefore be negotiated between the parties concerned, according to the working rules of society’. (Commons 1934, 58)

Commons emphasises ‘futurity’, that is, not immediate but future physical ownership is transferred, which, inspired by Keynes’s work, introduces radical uncertainty as a key characteristic of all transactions. This means that the transaction process is temporally dislocated from the exchange process. Another core theme in his theory is working rules, which can be formal (e.g. laws) or informal (e.g. conventions). Since a transaction is a relationship between man and man, it is characterised by conflict, mutuality, and order. The interests of the parties involved are both in conflict and mutually dependent. Order is a necessary characteristic because of the radical uncertainty of the future. Commons argues that the future must, to some extent, be reliable to facilitate action in the present (Commons 1934, 58). The security of expectations is guided by working rules, which ‘work as a limiting factor on behaviour’ and guide what is legally and ethically accepted by society (Commons 1934, 140).

The enforcement of working rules is a gain for one, which comes at a loss for the other. When it creates liberty for one party, it results in exposure for the other. When it creates security for one party, it demands conformity from the other. Hence, working rules that govern transactions in which pricing processes are embedded determine not only the distribution of wealth but also the distribution of the burdens and benefits of wealth creation, including the distribution of risk. This entails who is exposed to uncertainty, which is allocated according to security and conformity, liberty and exposure. Security for one requires conformity from the other; liberty awarded to one, leaves the other exposed.

Legal (and political) power is the control over agents’ future behaviour and hence is as important as economic power in shaping the outcomes of transactions (Commons 1934, 86). Power is hence a key theme for Commons. Ultimately, ‘power […] determines whose interests count and who reaps the rewards and carries the costs of economic activity’ (Kaufman 2007: 16). Different types of transactions are reflective of different power configurations. Commons distinguishes between three types of transaction, which are characterised by different degrees of economic, political and legal power asymmetries: bargaining, rationing, and managerial transaction. The latter two are characterised by political (rationing) and legal (managerial) asymmetries, and the former by economic asymmetries but legal symmetry (bargaining).

Pricing in the bargaining transaction is driven by relative scarcity as well as the unequal economic power of those involved, which affects bargaining strength. Pricing in the managerial transaction is driven by proprietary scarcity, which means that the actor with legal control over resources can generate situations of scarcity or abundance to influence price. In rationing transactions, prices are administered according to working rules enforced by a (collective) authority. While not considered by Commons directly, later authors have interpreted the rationing transaction to include cost-plus or markup pricing, that is, administered prices set to achieve intended profit margins for powerful actors (Takahashi, 2018).

Working rules for Commons are not immutable or static. Commons adds the strategic transaction as a fourth type of transaction and a special form of the bargaining transaction. He argues that institutional change is initiated by limiting factors, which turn a bargaining transaction into a strategic transaction. Limiting factors are constraints, such as working rules, scarcity, or authority, which limit actors’ behaviour so that a bargaining transaction cannot be concluded. Strategic transactions, therefore, aim at changing existing working rules through collective action (violent or non-violent) or legal means (Commons 1934, 86).

Analytical framework

Following the existing literature, this paper understands pricing as an institutionally embedded (within a transaction) and contested process (Bargawi and Newman 2017; Beckert 2011; Staritz et al., 2023; Çalışkan and Callon 2010). We use these insights as a starting point to develop a framework that borrows from Commons’s institutional theory. Commons’s distinction between legal and physical transfer accounts for the temporal aspect of a transaction, which enables us to analyse uncertainty. Once the pricing processes within a transaction are identified, price uncertainty and the distributions of the costs and benefits that arise from this uncertainty ⁸ can be derived as an outcome of this process. In our framework, we distinguish between four stylised pricing processes: price negotiation, price administration, price formation, and price derivation.

Price negotiation is akin to Commons’s bargaining transaction, and is a transaction between legal equals with outcomes dependent on relative economic and political power. Price administration is akin to Commons’s rationing transaction; prices are imposed by an economic (and possibly political or legal) superior actor or collective of actors (e.g. producer pricing, cost-plus pricing, and price caps set by governments). In this configuration, control over prices lies solely with the more powerful actor. Price formation, on the other hand, is inspired by an auction-type market setup. ⁹ Both buyers and sellers have low control over the price, as bargaining is limited by working rules that anonymise and standardise the transaction. ¹⁰ For many commodity chains, price formation takes place in commodity derivative markets. These are markets for contracts that award the future right to buy or sell a physical commodity. Futures contracts are rarely executed and commonly closed before the delivery due date. ¹¹

Price derivation is the process of imposing a price that is neither negotiated nor formed in the specific transaction but instead derived from another transaction (e.g. using a futures price as a reference price in a transaction). This means that price derivation is not a price generation process, as a price generated in a different transaction is transferred. Derived prices are therefore a specific form of administered prices, but without any agent involved in the transaction and pricing process directly enforcing the imposition of a price; hence, none of the parties involved has any control over this imposition within the transaction. Rather, the derived price is imposed by working rules. This does not mean that the existing working rules do not favour one party over the other (have distributional consequences) or that these working rules cannot be changed. However, challenging these working rules lies outside the transaction within which the pricing process is situated. Indeed, the imposition of a derived price might preserve or improve profit rates and provide security for one party, while reducing profit rates and increasing risk exposure for another.

The typology in Figure 1 provides a stylised categorisation of pricing processes within a transaction, and these pricing processes can emerge as a composite or combination of these stylised processes within a single transaction.OPEN IN VIEWER

The pricing process is part of a transaction which involves the legal transfer (mode), alongside an agreement over quantity, insurance, and other modalities of the transaction. The legal transfer is both temporally and spatially distinct from the physical transfer (matter) of goods and moneys. The distinction between the transaction process, of which pricing is part, and the exchange process introduces the element of ‘futurity’ and thereby uncertainty, as in Commons’s theory. ¹² We also adopt Commons’s notion of working rules as the laws and conventions that govern pricing processes within transactions. Power asymmetries are historically rooted and hence path dependent and can be challenged in what Common calls strategic transactions.

We argue that an understanding of the emergence of working rules and their contestations requires a political economy analysis. This involves an analysis of the distribution of power between different groups of stakeholders, the resources under their control, their capacity and capability to mobilise and organise around a common cause, and their ability to generate, retain, and sustain support (Khan, 2018). ¹³

Methodology

To better understand the institutional structures that underpin pricing along the cocoa chain, we create a temporal and spatial map of pricing points. This allows us to identify the working rules that govern pricing processes, the powers embedded in these working rules, and the distribution of burden and benefits within transaction arrangements. The mapping draws on document analysis as well as insights from semi-structured interviews conducted with key informants, including the sector regulator, licensed buyers and aggregators, civil society organisations, farmer representatives, and the Ghanaian central bank between 2024 and 2025 and the authors’ first-hand knowledge of the cocoa sector (see Appendix for a full list of interviews).

The mapping exercise and the pricing points identified build the analytical foundation for a political economy analysis of pricing, the working rules shaping pricing processes, embedded power relations and the distribution of price risk along the cocoa chain. Embedded power relations are traced through two recent contestations of working rules and their outcomes: (i) the introduction of the Living Income Differential (LID) in 2020, and (ii) the discontinuation of the syndicated loan in 2024.

A brief history of Ghana’s cocoa marketing

Ghana is the only country that has not abolished its marketing board and has therefore maintained a state monopoly on the sale of cocoa beans. The monopoly is managed through CMC, a subsidiary of Cocobod, which is registered as a limited company. Cocobod is the institutional successor of the West African Producer Control Board, which was introduced in 1940 by the British coloniser at the onset of the Second World War (Acquaah, 1999; Wickizer, 1951). Under the board, prices were fixed, and the rising power of domestic middlemen and cooperatives was curtailed by allocating buying quotas to Licensed Buying Agents, which were registered with the board.

The system suppressed political unrest and hostility towards European buyers after several cocoa holdups in the late 1930s ¹⁴ and helped finance British war efforts by dictating a low cocoa bean price (Alence, 1991). Its introduction led to a prolonged squeeze of the cocoa producer price, which deteriorated from up to 90% of the export price to as low as 40% (Acquaah, 1999). Once the board was in place, the producer price remained suppressed long after independence in 1957; see Figure 2.OPEN IN VIEWER

Initially, the prices received by traders were formed at the spot exchanges in Liverpool and London (Dand, 1995: p. 82). With the development of edible chocolate in the late 19^th century and growing demand for cocoa beans, forward contracts became the preferred mode of transaction. Forward contracts could be cleared via the London Produce Clearing House, established in 1888 (Cranston, 2007). Three trade associations were formed to administer standardised contracts and provide arbitration services: the Cocoa Merchants’ Association of America (CMAA) in New York, the Cocoa Association (CAL) in London, and the Association Francaise du Commerce des Cacaos (AFCC) in Paris (Dand 1995, 84). In 1925, the first standardised cocoa futures market opened in New York (today ICE US), which remained the benchmark for cocoa for the subsequent decades. The London Commodity Exchange opened in 1954 and became the second leading commodity exchange for cocoa (today ICE EU).

The forward contract system was favoured by the trading houses, not only because it mitigated price and supply risk, but also because the system was less transparent than the open auction system previously practised in Liverpool and London, and competitors were left with uncertainty over the price and volume of deals (Dand 1995, 83). This favoured large trading houses, which could trade on proprietary information and release information about stock holdings when it favoured their positions in the market. The two largest trading houses at the time were the United African Company (UCA), later owned by the Lever Brothers (Unilever), and Cadbury (later Cadbury and Fry), owned by the Cadbury Brothers (Acquaah 1999, 99-100). UCA entertained an import-export business and was the major buyer of cocoa in the 1930s, with over 1000 buying points and merchandise outlets. Due to its dual role as both importer and exporter, the company was at the centre of the cocoa holdups of the late 1930s (Acquaah 1999, 108).

Post-independence, 1957, the state monopoly on cocoa trading remained in place, albeit with some interruptions and alterations (Mikell, 1989). Like many commodity export-dependent economies, Ghana received financial assistance from the IMF in the 1980s. Anticipating the IMF’s austerity programme, the Ghanaian government drew up a reform plan for the cocoa sector, which saw the previous marketing board replaced with today’s Cocobod and partial liberalisation of the internal cocoa marketing system in the early 1990s (Akiyama et al., 2001; Gocking, 2005; Laven, 2010; Quartey, 2013). In many ways, the partial liberalisation reinstated the system in place during colonial times, with Licensed Buying Companies (LBCs) ¹⁵ sourcing cocoa beans on behalf of CMC. Although farmers’ share in the export price has improved, the working rules governing pricing processes today have largely survived since colonial times.

Mapping pricing points in Ghana’s cocoa marketing

Ghana’s cocoa marketing system has an internal and external component, with CMC managing both sides. Two crop seasons exist: the main crop, with the harvest starting in September and lasting until May, and the light crop, lasting from June to September. We focus on the main crop season, where the bulk of the cocoa is harvested and shipped. Operations are divided into two stylised periods: (1) pre-harvest and (2) during and post-harvest. We refer to this periodisation as stylised, as the two periods blend into one another. Transaction processes along the chain span both periods, with pricing mostly taking place in period 1 and the exchange of goods and moneys in period 2 (with more flexibility in the timing downstream of the chain).

Before the 2024–25 season, most of CMC’s internal marketing operations were financed by a syndicated loan. The loan, obtained at international money markets, was collateralised with fixed-price forward contracts (van Huellen, Sophie). This meant that CMC had to sell forward an adequate volume of cocoa beans to secure sufficient collateral for the loan before September. Standardised contracts are provided by the Federation of Cocoa Commerce (FCC), formed after a merger between the CAL and AFCC in 2002. FCC offers two contract types: (1) fixed price, in which the price is fixed at the time of signature to the price of the futures contract that matures close to the agreed delivery date and (2) differential, in which the price floats with the price of the futures contract. These working rules are embedded in FCC contracts, and the need to secure a syndicated loan imposed the dominant use of fixed-price contracts. Since the abolition of the syndicated loan, CMC is more flexible in its use of fixed-price and differential contracts.

The London ICE cocoa price, denominated in Pounds Sterling, is the reference price for Ghanaian cocoa beans in all FCC contracts. The GBP-USD exchange rate is derived and fixed at the time of signature. A country premium is added to the terminal price, which is negotiated between CMC and the buyer. Since June 2019 (for the 2020/21 cocoa season contracts), the LID set at 400 USD over the terminal has been administered by Cote d’Ivoire and Ghana as an additional premium to the country premium. The price that CMC receives is hence a composite of a derived price, which is formed at the terminal market, imposed by working rules embedded in standardised FCC contracts, a negotiated price, which is the country premium, and an administered price, which is the LID.

The buyers signing the contracts with CMC tend to be large multinational commodity trading houses that maintain forward contracts with processors and confectionery companies (Fold, 2001, 2008). These forward contracts are commonly on a cost-plus basis, where the buyer administers costs of sourcing and processing and a profit margin. A few large buyers (e.g. Olam, Barry Callebaut, Cargill, ECOM, Sucden, and Touton) dominate the space, and most cocoa is sold to them. The remaining contracts are signed with domestic buyers, which could be Ghanaian-owned businesses (e.g. Niche Cocoa and Plot Enterprise), but in many cases are also foreign-owned (e.g. Barry Callebaut, Olam, Touton, and Cargill all maintain processing companies in Ghana). Previously, the need for collateral forced CMC to prioritise multinationals over indigenous buyers. ¹⁶

The financing requirement for sourcing cocoa beans exceeds the domestic banking sector’s capacity. The syndicated loan was a way to access cheap financing via international money markets. It was obtained in USD via the Ghana International Bank (GHIB), a London-based subsidiary of the BoG and the receiving bank for all cocoa sales proceeds on behalf of Cocobod. The interest rate for the loan was derived as the standard borrowing rate (LIBOR), plus a risk premium, which was negotiated based on the lead bank’s assessment of CMC’s credit risk. ¹⁷ Once the loan was agreed, it was transferred to GHIB, which forwarded the USD to the BoG. The BoG then released the GHS equivalent to Cocobod. The USD-GHS exchange rate was negotiated between Cocobod and BoG, roughly reflecting rates between October and December, the loan drawdown period (interview 5). From the GHS equivalent of the loan, Cocobod extended financing to LBCs at a rate set by Cocobod relative to the BoG prime rate.

Since the syndicated loan’s discontinuation, LBCs must secure financing independently, either through bank loans, their own capital or through pre-financing of the crop by buyers (interviews 8, 9, 11). Multinational buyers emerged as the dominant financiers, either by providing financing directly or by providing securities against which a loan from the domestic banking sector is obtained (interview 8). LBCs owned by multinational trading companies have a ‘natural’ financing partner. Domestically owned LBCs, especially those with small balance sheets and limited own capital, are reliant on buyers’ willingness to pre-finance the sourcing of beans (interviews 6, 11). These pre-harvest arrangements are summarised in Figure 3, with red segments being those no longer in place and the green segment representing the new financing system. ¹⁸ OPEN IN VIEWER

Margins received by LBCs and hauliers and the price received by cocoa farmers are negotiated within the Producer Price Review Committee (PPRC). The coverage of other costs incurred by Cocobod, like payroll, warehousing, jute bags for transport, fertiliser and pesticides, and quality control costs, as well as an export duty for the Ministry of Finance, is also negotiated. The PPRC includes farmer representatives, LBC representatives, hauliers, Cocobod and representatives from academia. The Minister of Finance chairs the committee. Before negotiations, all operational stakeholders are asked to submit an approximation of their costs and a suggested margin.

Working rules stipulate that the negotiations within PPRC are based on the projected gross free on board (GFOB). ¹⁹ The projected GFOB is the product of the forecasts for three variables: (i) crop size in tonnes, (ii) cocoa bean price per tonne in USD – itself a composite of terminal price and country premium and LID, and (iii) the projected exchange rate for 12 months starting September/October of Ghana Cedi per USD. The BoG provides the latter forecast, and Cocobod predicts the former two variables. Crop size predictions are based on pod counting and farmer surveys. Predictions on the bean price are based on the forward contracts already signed by CMC and market intelligence (and the predicted GBP-USD exchange rate).

Per working rules, a minimum of 60% and a maximum of 70% of the GFOB is allocated to farmers (interview 10). Working rules also stipulate not to reduce the nominal farm gate price as compared to the previous year. These working rules set the framework for negotiations. The PPRC chair has the final word in these negotiations. The agreed cocoa price and margins are made public a few days before the main crop season and are usually fixed for the season. In some instances, the farmgate price is announced by the President of Ghana, highlighting the political relevance of the cocoa sector. If a higher price than predicted is obtained, the farmgate price can occasionally be revised mid-season. Table 1 summarises the different pricing points mapped in Figure 3, the types of pricing processes within them, and the working rules underpinning them.

OPEN IN VIEWER

Table 1.

Summary of pricing points, processes, and working rules.

Pricing points	Transaction parties	Pricing processes	Working rules
Farmgate	Farmer and purchasing clerk/LBC	Derived at farmgate (GHS); negotiated at PPRC.	PPRC rules, predicted (and realised) GFOB and 60–70% share for farmers
CMC warehouse (in)	LBC/Haulage and CMC	Negotiated (margin for LBCs and haulage companies) (GHS).	PPRC rules and predicted GFOB
CMC warehouse (out)	CMC and buyer	Composite: Derived price (ICE London) (GBP) + negotiated price (country premium) (USD) + administered price (LID) (USD)	FCC contracts linked to ICE (previously syndicated loan as limiting factor imposing fixed-price contracts) + LID
Buyer warehouse	Buyer and processor/confectionery company	Composite: Cost component administered, and profit margin negotiated (most commonly USD).	Cost-plus contracts, with reference to ICE at the initial stages of processing.

With the start of the harvest period, LBCs source cocoa beans from farmers through purchasing clerks and deliver them to CMC warehouses located in Tema, Takoradi, or Kumasi through haulage companies. When cocoa beans are delivered to a takeover point, the LBC receive a Cocoa Taken-Over Receipt (CTOR), which entitles them to be compensated by Cocobod (the money extended to farmers plus the agreed margin). Reimbursement is not immediate, and hence temporarily dislocated from the exchange. LBCs compete over volume, not price. A fast turnover is hence essential to remain profitable. After handover at the CMC warehouses, the LBC informs CMC of pre-financing arrangements (if there have been any), and the crop is shipped to the buyer who pre-financed the crop (interview 9).

After shipping documents are received, the respective buyer transfers payments to GHIB, which then transfers the USD to the BoG, which converts it into GHS and transfers it to Cocobod. Cocobod then settles the CTOR with the LBC, and the remainder is retained to settle operational expenses. Previously, GHIB would first repay the loan plus interest from the cocoa proceeds, before transferring the remainder to the BoG, prioritising payment to creditors over farmers; a condition of the syndicated loan. After all operational costs are deducted from the cocoa revenues, any profits are transferred to the Ministry of Finance as an additional export duty. ²⁰ The flow of funds and goods during the harvest and post-harvest period is summarised in Figure 4, with red segments being those no longer in place and the green segment reflecting the new system.OPEN IN VIEWER

Figures 3 and 4 demonstrate the temporal dislocation between pricing processes and the flow of goods and moneys between pre and post/during harvest period. This dislocation introduces uncertainties, with benefits and costs carried unevenly by cocoa stakeholders. Who carries these risks and who benefits depends on the existing working rules governing the transactions along the cocoa chain and their contestations. These will be analysed in the following section.

The political economy of Ghana’s cocoa marketing

To understand power relations embedded in working rules and the division of the costs and benefits among cocoa stakeholders, we analyse two recent contestations of pricing processes: (i) the introduction of the LID in 2020 and the COVID-19 period, and (ii) the cocoa price surge in 2024 and the subsequent discontinuation of the syndicated loan.