{"id":30837,"date":"2022-11-03T09:27:11","date_gmt":"2022-11-03T09:27:11","guid":{"rendered":"https:\/\/bartalks.net\/?p=30837"},"modified":"2022-12-31T11:07:48","modified_gmt":"2022-12-31T11:07:48","slug":"who-benefits-from-koas-transparency-system-the-cocoa-farmer-koa-or-koas-collaborators","status":"publish","type":"post","link":"https:\/\/bartalks.net\/who-benefits-from-koas-transparency-system-the-cocoa-farmer-koa-or-koas-collaborators\/","title":{"rendered":"WHO BENEFITS FROM KOA’S TRANSPARENCY SYSTEM? THE COCOA FARMER, KOA OR KOA’S COLLABORATORS?"},"content":{"rendered":"\n

The Assessment of KOA\u2019s Transparency system continuous<\/strong><\/p>\n\n\n\n

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The other issue revealed is how Koa gains and the farmer loses out on the currency depreciation:<\/strong><\/p>\n\n\n\n

As noted in Graph 1 (part 1), The Ghana Cedi depreciated\/US$ appreciated by 55%. This means the income earned by farmers from Koa lost 55% of its value in just a year. On the other hand, Koa\u2019s sales revenue in US$ gained 55% in value against the Ghana Cedi. This means Koa need less US$ to purchase more Cocoa pulp from Ghanaian Cocoa farmers in Ghana Cedi. So, for example, Koa used US$43,889 to buy GH\u00a2254,556.2 worth of Cocoa Pulp in the 2021\/22 crop year. In the 2022\/23 crop year, Koa can use the same US$43,889 to purchase GH\u00a2395,001 worth of Cocoa Pulp. If the farmers want to import any product or pay their children’s fees at Harvard in US Dollars, they will need to search for more Ghana Cedis to buy a few dollars to pay these fees. This demonstrates how Koa\u2019s decision not to pay farmers in the same currency they sell their final product can lead to farmers losing and Koa gaining on the currency exchange rate front. This is the main reason I advised Koa to price the cocoa pulp in US$ so that at different points when they purchase it from farmers, the farmers can benefit from the US$ appreciation to offset the ever-growing inflation rates in Ghana. This will ensure that farmers retain a higher value for their income and increase their purchasing power even during the inflationary period. Between the 2021\/22 and 2022\/23 crop years, the Gh\u00a2 depreciated by 55%.<\/em><\/strong><\/p>\n\n\n\n

An example of the potency of my advice can be inferred from Graphs 2 and 3. From October 2021 to July 2022, Ghana\u2019s inflation rate, as shown in Graph 3, has risen from 11 to 31.7. So, you can imagine how the 55% appreciation of the Dollar against the Ghana Cedi in graph 1, if the farmer were paid in Dollars, would have offset the current 31.7 inflation rate, allowing the farmers to have a purchasing power that is inflation resistant.<\/em><\/strong><\/p>\n\n\n\n

Graph 3: Ghana\u2019s Inflation Rate between October 2021 to July 2022<\/em><\/strong><\/p>\n\n\n\n

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Source: Trading Economics with Raw data from Ghana Statistical Service<\/strong><\/p>\n\n\n\n

So, suppose Koa wants to be transparent as its transparency system aims, then they need to indicate the amount in Ghana Cedi as that is the currency the farmers are paid in or pay farmers in US$, as I suggested. This will prevent misinformation issues and help farmers become resilient against inflation to deal with inflation-driven poverty.<\/em><\/p>\n\n\n\n

If Koa wants to be transparent, they must pay the cocoa farmers in the currency their finished product is sold. Suppose they want to pay the farmers in Ghana Cedi still. In that case, they can agree on the exchange rate and indicate that exchange rate on the transparency system so that we can be sure that they are not leveraging the depreciation of the Ghana Cedi to exploit Cocoa farmers for profit. Consumers need to know how the purchase price of cocoa pulp keeps reducing in US$ due to the Ghana Cedi\u2019s consistent depreciation. Transparency means providing a lot more details.<\/strong><\/p><\/blockquote>\n\n\n\n

Also, the system doesn\u2019t indicate a detailed period in days, months, or years in which a particular amount of cocoa pulp was purchased and an amount given. I believe this will make it easy to reconcile and audit their claims on the platform. One good thing about Koa is that they were willing to listen and consider recommendations and felt that there was a need for them to get their feet held to the fire. Koa responded to this by highlighting that has started to verify transactions on 19 January 2022 and that each transaction can then be seen below, which is quite detailed.<\/p>\n\n\n\n