Ghana Cocoa 1

COCOA ADVOCACY GROUP SPEAKS OUT ON NEW GHANA COCOA PRICE

The Coalition for Cocoa Sector Reforms (CCSR), an advocacy group, has commented on Ghana’s new Cocoa prices for 2022/2023, claiming that the low price (in dollar terms) could destroy the country’s embattled Cocoa industry.

Through the Ghana Cocoa Board, COCOBOD, the group called on the government to reconsider the price of GH¢800 ($57.55) per bag:

Farmers over the last two decades were always assured of over $100.00 out of the world market price for each bag of Cocoa sold through the (Freight on Board) FOB pricing mechanism used in setting the price for the commodity. It is however unfortunate and surprising that [the] government this year awarded to farmers, less than $80.00 for a bag of cocoa.

This is rather a decrease in producer price than an increase hence COCOBOD must come again. In these times of increasing inflation, prices of inputs, fuel and economic hardship, this treatment to our hardworking cocoa farmers must change.

Mr Ayisi Kumah Thomas Kwesi, the Coalition’s President, and Mr Hedidor Alexander Yaw, Secretary of the Coalition

The full statement is critical of the producer price announced by the Minister for Food and Agriculture for not only being lower than some hoped but also demotivating for Cocoa farmers. The markets ongoing challenge in setting a fair price that allows farmers to prosper will deter young people who are needed to succeed the existing farmers.

The problem goes back over a decade, when in 2012 the average age of a Cocoa farmer in Ghana was over 50. In 2015 the Financial Times interviewed a mother and her daughter on a Ghanaian Cocoa farm. “Farming is tedious and difficult,” said the daughter when asked if she was interested in taking up the family business. “There are no young people farming these days.”

Farming is tedious and difficult.. There are no young people farming these days.

FinancialTimes Interview with a farmers daughter – 2015

An analysis carried out by the coalition concluded that farmers’ productivity would fall due to the low prices, especially in the context of the cost of living crisis and the drastic devaluation of the cedi against the dollar.

It is clear and beyond all doubts that with this lowering of Cocoa prices (in dollar terms), Government and COCOBOD will render Cocoa farming unattractive to the youth by worsening the economic plight of Cocoa farmers.

Cocoa farmers are already impoverished and overwhelmed by our current economic situation and to further reduce the price of cocoa will worsen their plight.

This is an industry that has supported this country for over 30 years with revenue from exports, but there seems to be a clear lack of foresight, or an ill-will in the management and sustenance of the sector by its current managers: COCOBOD.

CCSR

As neighbouring Côte d’Ivoire has increased its farmgate prices to CFA900 ($61.3), there are reports of Cocoa beans being smuggled across the border to fetch a higher price. This is nothing new, but arbitrage in trading Cocoa has other negative consequences in traceability and quality control. Moreover, there is little to no money left to reinvest in the farms themselves.

The difficult financial situation of farmers could also lead to an increase in illegal mining activities as farmers sell their land to mining companies. The statement claimed that about 19,000 hectares of Cocoa land were lost to illegal mining activities last year and that they would not be surprised if this number triples if something is not done to improve farmers’ living conditions.

We believe that any government interested in discouraging smuggling, fighting against galamsey (illegal small scale gold mining), increasing annual cocoa volumes, and improving the lives of its gallant cocoa farmers should rather increase prices to discourage negative tendencies and sustain the economy.

Before the dust could settle on the topic of this cocoa price reduction, the Bank of Ghana (BoG) came with a hike in the monetary policy rate to tighten the economy.

This came after drawing down on the $1.13 billion syndicated cocoa loan to be used to shore up its Forex reserves and stabilise our currency. The hike in monetary policy rate which will directly or indirectly increase lending rates, the cost of goods and services including cost of cocoa inputs. Closure of shops in Kumasi and the intentions of GUTA to also close shops in Accra is evidence of an expected increased cost of living which farmers cannot escape.

CCSR

The Cocoa industry, which has sustained the country’s economy for three decades and provided a decent living for farmers, buyers, district managers, depot administrators and port officials, is on the verge of collapse if forceful and positive action is not taken.

In this period of rising youth unemployment, it will be sad to witness the collapse of another vibrant sector of our economy and we therefore call on all stakeholders in the supply chain to throw their weight behind CCSR GH to compel [the] government and COCOBOD to review the price or come out with a bonus package.

Though the significant depreciation of the cedi has been a major contributory factor to the degrading economic fundamentals, the dichotomy is that increased exchange differential gives government room to relieve cocoa farmers with a higher producer price for the season. The voices of cocoa farmers must be heard for if there’s no cocoa, there will not be COCOBOD.

CCSR
Photo by Antoshananarivo, CC BY-SA 4.0, via Wikimedia Commons

Author

Leave a Comment

Your email address will not be published. Required fields are marked *

en_GBEnglish