Journal of
Development and Agricultural Economics

  • Abbreviation: J. Dev. Agric. Econ.
  • Language: English
  • ISSN: 2006-9774
  • DOI: 10.5897/JDAE
  • Start Year: 2009
  • Published Articles: 527

Full Length Research Paper

Competitive strategies for purchasing of cocoa by licensed buying companies in Ghana: The determinants and performance implications

John-Eudes Bakang
  • John-Eudes Bakang
  • Department of Agricultural Economics, Agribusiness and Extension, Kwame Nkrumah University of Science and Technology-Kumasi, Ghana.
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Alexander Annor Frimpong
  • Alexander Annor Frimpong
  • Department of Agricultural Economics, Agribusiness and Extension, Kwame Nkrumah University of Science and Technology-Kumasi, Ghana.
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Seth Etuah
  • Seth Etuah
  • Department of Agricultural Economics, Agribusiness and Extension, Kwame Nkrumah University of Science and Technology-Kumasi, Ghana.
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Enoch Kwame Tham-Agyekum
  • Enoch Kwame Tham-Agyekum
  • Department of Agricultural Economics, Agribusiness and Extension, Kwame Nkrumah University of Science and Technology-Kumasi, Ghana.
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Isaac Nii Sowah
  • Isaac Nii Sowah
  • Department of Agricultural Economics, Agribusiness and Extension, Kwame Nkrumah University of Science and Technology-Kumasi, Ghana.
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Emmanuel Amponsah Doodo
  • Emmanuel Amponsah Doodo
  • Department of Agricultural Economics, Agribusiness and Extension, Kwame Nkrumah University of Science and Technology-Kumasi, Ghana.
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Mark Amponsah
  • Mark Amponsah
  • Department of Agricultural Economics, Agribusiness and Extension, Kwame Nkrumah University of Science and Technology-Kumasi, Ghana.
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Evelyn Kyeraa Boateng
  • Evelyn Kyeraa Boateng
  • Department of Agricultural Economics, Agribusiness and Extension, Kwame Nkrumah University of Science and Technology-Kumasi, Ghana.
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Mariama Iddrisu
  • Mariama Iddrisu
  • Department of Agricultural Economics, Agribusiness and Extension, Kwame Nkrumah University of Science and Technology-Kumasi, Ghana.
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  •  Received: 03 August 2021
  •  Accepted: 14 September 2021
  •  Published: 31 October 2021

Abstract

This study explored the different competitive strategies used by the Licensed Buying Companies (LBC), the determinants of their choices and how it affected their performance. It also determined whether these strategies used influenced a farmer’s decision to sell the cocoa beans to the LBCs as well as the constraints faced by farmers and the LBCS in doing business. Primary data was used for this study. Descriptive statistics and econometric models were used to analyze the objectives. From this study, prompt payment and use of accurate weighing scale were identified as the most effective competitive strategies with high cost of financing and lack of farm inputs and tools being the major challenges faced by the LBCs and farmers respectively. Good social relation of the purchase clerk, age of the farmer and the distance between the LBC and cocoa farmer had positive significant effects on cocoa farmers’ decision in choosing a particular LBC. It is recommended that the government supports the LBCs with early financing to aid them in providing cocoa farmers with the needed inputs, tools and equipment to improve upon their outputs.

Key words: Licensed Buying Companies (LBC), Amansie West District, choice of LBC, cocoa purchases, competitive strategies, Ghana, return on investment.