The COCOBOD reverted to the multiple buying system of cocoa purchasing in June 1993 following a government decision to re-introduce competition into the internal marketing of cocoa. The legal framework for the new marketing system is embodied in the ‘Regulations and Guidelines for the Privatisation of Internal Marketing of Cocoa’ issued by the COCOBOD.
In their operations, the Licensed Buying Companies (LBCs) are required to abide by the regulations and guidelines set out in the above mentioned document. Prospective buyers initially apply to the COCOBOD for consideration to be licensed as buyers. Upon vetting by an independent committee set up for that purpose, successful applicants are granted provisional licenses which may be converted into full licenses if the COCOBOD is satisfied that the provisional licensees have adequate operational logistics for effective operation. The operations of all LBCs are closely monitored by the COCOBOD. During the 1993 light crop season when the multiple buying system became operative, six companies operated in addition to the Produce Buying Company Ltd (PBC) a subsidiary of the COCOBOD. By the 1996/97 crop season, thirteen private LBCs were effectively operating in the internal marketing of cocoa alongside the PBC Ltd. By 1997 an additional six LBCs had come into operation.
The initial thirteen private LBCs with a combined market share of 32%, competed with the PBC, which carried 68% of the market in the internal marketing of cocoa.
All the LBCs purchase cocoa from farmers at a minimum producer price set by a Producer Price Review Committee (PPRC) which comprises COCOBOD officials, a farmer’s representative, government representatives and representatives of the LBCs. The LBCs purchase their cocoa through buying centres which are established in the cocoa production areas.
On the average, about 4,600 buying centres were in operation between 1993 and 1997. After purchasing the cocoa, the LBCs invite the Quality Control Division to grade and seal the cocoa at a fee determined by the PPRC. The graded and sealed cocoa is evacuated by the LBCs using private cocoa hauliers to designated take over points such as Tema port, Takoradi port and an inland port at Kaase, Kumasi. The rates offered for evacuation are also determined by the PPRC. Officials of the CMC take over the cocoa at the various take-over points. The LBCs are paid by the COCOBOD according to margins set by the PPRC. After the rate-over, management of the cocoa becomes the responsibility of the CMC until it is shipped overseas.