An empirical investigation of the costs and benefits from moving up the supply chain: The case of Ghana cocoa

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Using simple cost-benefit analysis, this thesis investigates why Ghana, the world‟s second largest cocoa producer, has followed a strategy of exporting its cocoa beans instead of processing the beans into semi-finished and finished cocoa products. It is assumed that apart from the necessary technological ability needed to process cocoa beans the economic incentive for an increasing focus on processing relative to producing the beans for export is the profit incentive. The analysis is complicated by the fact that although there may be higher margins to be earned from processing cocoa, Ghana also earns high premiums from exporting raw beans because it exports the most quality cocoa in the world: all cocoa is typically discounted to Ghana. The results of this study showed that while generally, costs were higher for processing of raw cocoa beans into semi-finished and finished products and revenues from processing were mostly higher than from production for export; profits from processing were always higher than from production. This proved that financially it would be more profitable to increase processing of cocoa beans in Ghana. This study would serve as a springboard for further research on Ghana‟s cocoa industry and would largely benefit the Ghana government and Ghana Cocoa Board with regards to plans for expansion of the cocoa industry. It would aid the government and COCOBOD in the creation of policies and regulations which would boost the industry.
Thesis submitted to the Department of Business Administration, Ashesi University College, in partial fulfillment of Bachelor of Science degree in Business Administration, April 2010
Ghana, cocoa processing, COCOBOD, exports