The Coalition for Cocoa Sector Reforms (CCSR) GH has called on the government to impress upon the Ghana Cocoa Board (COCOBOD) to reconsider the 2022/23 producer price announced else, the impact of the ¢800 per bag of cocoa beans recently announced will be very damaging to the industry.
The government through the Ministry of Agriculture recently increased the producer price of cocoa by 21 percent, translating to GH¢800 per bag, from the previous GH¢600.
But the CCSR indicated that 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 free on board price (FOB) pricing mechanism used in setting the price for the commodity.
However, they said, “unfortunate and very surprising that 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 kind of treatment to our hardworking cocoa farmers was the least expected.”
The group added “The decision to reduce cocoa price makes it the poorest decision because the consequence are too obvious. This decision of reducing cocoa price (in dollar terms) came in the midst of reports of cocoa farmers selling their arable land to illegal mining operatives (Galamsey), neighboring country Ivory Coast raising its farm gate price to CFA900 equivalent to GH¢852.00, increasing prices of inputs, increased unemployment, and ageing farmer population.
“In relation to the selling of cocoa farms to illegal miners, it was reported that, about 19,000 acres of cocoa lands were lost to galamsey activities last year. It will not be surprising that this figure will be more than tripled in the ensuing year. Cocoa beans would be further smuggled along the border towns, farms will receive little or no investments and consequently, the country will attain less production volumes than the previous year.”
Below is the full statement issued by the group…
2022/23 COCOA PRICE AMOUNTS TO KILLING THE COCOA INDUSTRY, GOVERNMENT MUST IMMEDIATELY REVIEW
The Coalition for Cocoa Sector Reforms (CCSR) GH is calling on government to impress upon COCOBOD to reconsider the 2022/23 producer price announced else, the impact of the GH¢800.00 per bag of cocoa beans announced will be very damaging to the industry.
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 FOB pricing mechanism used in setting the price for the commodity. It is however unfortunate and very surprising that 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 kind of treatment to our hardworking cocoa farmers was the least expected.
The minister for agriculture over a week ago announced this abysmally low and demotivating producer price for cocoa to begin the 2022/23 crop season without deeply considering the impact the price reduction will have on farmers. The analysis carried out by the Coalition for Cocoa Sector reforms show that, further reduction of Cocoa price is disincentive to cocoa farmers hence will lower productivity, given the fact that both Cost of living and Cost of production has increased astronomically in Ghana, owing to inflation and rapid depreciation of the cedi against the Dollar.
It was therefore the expectation of Cocoa farmers and all those working along the supply chain of cocoa production in Ghana that, government would have relied on the exchange rate gains from the depreciating cedi to compensate farmers and relief them of the excruciating economic hardship in this critical time. On the contrary, farmers have been short-changed with an insensitive price lower than that of neighbouring Ivory Coast who have comparatively maintained relative stable currency and economy.
It is clear and beyond all doubts that with this lowering of cocoa prices(dollar terms), Government and COCOBOD will render Cocoa farming unattractive to the youth by worsening the economic plight of cocoa farmers. It was so much surprising and insinuating for the minister to have posited that the new price will make cocoa farming lucrative. How can an anaemic person be forced to donate blood? Cocoa farmers are already impoverished and overwhelmed by our current economic situation and to further reduce the price of Cocoa brings into mind the insensitivity and incompetence of the motives and priorities of government towards the industry’s sustainability. This is an industry that has supported this country for over 30years 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.
The decision to reduce cocoa price makes it the poorest decision because the consequence are too obvious. This decision of reducing cocoa price (in dollar terms) came in the midst of reports of cocoa farmers selling their arable land to illegal mining operatives (Galamsey), neighboring country Ivory Coast raising its farm gate price to CFA900 equivalent to GH¢852.00, increasing prices of inputs, increased unemployment, and ageing farmer population. In relation to the selling of cocoa farms to illegal miners, it was reported that, about 19,000 acres of cocoa lands were lost to galamsey activities last year. It will not be surprising that this figure will be more than tripled in the ensuing year. Cocoa beans would be further smuggled along the border towns, farms will receive little or no investments and consequently, the country will attain less production volumes than the previous year.
In effect, the probability of government not being able to redeem its commitment to the syndicated loan is high under these forecast conditions. The credibility of COCOBOD in acquiring future loans will be impaired and eventually the industry suffers existential threat. This is why it is imperative to indicate that, the current price announced amounts to attempts to kill the industry. And if all Ghanaians will sit-back as usual, the consequence will be unbearable.
Coalition for Cocoa Sector Reforms (CCSR) GH wants government to be expedient in reviewing the price to ameliorate the plight of Ghanaian cocoa farmers in the year ahead. We believe that any serious government interested in discouraging smuggling, fighting against galamsey, increasing annual cocoa volumes, and improving the lives of its gallant cocoa farmers who’s sweat have accrued over $25bn in terms of syndicated loans to its economy would have rather rewarded the farmers in a comprehensive manner to reduce the threats associated to the sale of lands, encourage more unemployed youth to venture into cocoa farming as well as reduce threat of smuggling, improve farmers welfare and consequently increase production volumes to meet the target of loan providers. This will also help secured and sustain the cocoa industry.
Before the dust could settle on the topic of this Cocoa price reduction, BOG came with a hike in monetary policy rate to tighten the economy. This came after drawing down on the $1.13bn syndicated cocoa loan to be used to shore up its Forex reserves and stabilize 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 evident of an expected increased cost of living which farmers cannot escape.
The once revered cocoa industry that have pillared this country for over three decades and hitherto provided dignified living conditions to its farmers, purchasing clerks and District Managers of LBC’s, Depot Keepers and Port Officers, suffers an imminent collapse but interestingly COCOBOD as a result of their incompetence and mismanagement instead of mitigating it, is gradually helping it to go down. The opportunity for government to rescue the sinking ship was to have given farmers descent price for their produce. In this period of rising youth unemployment, it will be sad to witness the collapse of another vibrant sector of our economy few years after the collapse of indigenous banks and non-banks.
We therefore called on all stakeholders in the supply chain to throw their weight behind Coalition for Cocoa Sector Reforms (CCSR) GH to immediately compel government and COCOBOD to review the price or come out with a bonus package. without this, Government may suffer massive demonstration and other undisclosed intended actions to be unleashed. 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 NO COCOBOD
THANK YOU
