The increment in cocoa price commendable-GCCP
The Ghana Civil-Society Cocoa Platform has commended the government for the introduction of a floor price and a Living Income Differential (LID) to be paid by chocolate and processing companies.
A statement issued by GCCP said the latest increment ”…is a great milestone, and a show of COCOBOD’s commitment to awarding cocoa farmers the full LID of four hundred United States dollars per metric ton (US$400/MT).”
It also asked COCOBOD to strengthen its surveillance at various depots and cocoa-sheds to ensure cocoa farmers enjoy the new farm gate price for cocoa without being cheated.
”The COCOBOD must strengthen its surveillance in order to curtail all factors that could hinder the farmer appreciating fully the LID. We specifically suggest that intensive monitoring at various depots and cocoa-sheds are undertaken, as well as, sensitization of farmers on how to escape weighing scale adjustment fraud by purchasing clerks (PCs) as reported in a 2019 SEND GHANA study. It is of great importance that the COCOBOD sanctions identified PCs who were caught in the Joy News “Missing Kilos” documentary in August this year as a deterrent to others, whiles we await implementation of electronic weighing scales next year.”
Below is their full statement
GCCP COMMENDS THE GHANA COCOA BOARD ON PRODUCER PRICE INCREMENT FOR 2020/2021 COCOA SEASON
The Ghana Civil-Society Cocoa Platform (GCCP) celebrates government’s efforts in ensuring cocoa farmers earn a decent income. We have followed various steps taken by the government and its Ivorian counterpart resulting in a massive change in price of cocoa beans, following the introduction of a floor price and a Living Income Differential (LID) to be paid by chocolate and processing companies.
The recent announcement of GHS 660 payment per bag of 64kilogram of cocoa, which translates into GHS10,560 per a tonne of 16 bags for the 2020/21 crop year, beginning 1st October, 2020, is a great milestone, and a show of COCOBOD’s commitment to awarding cocoa farmers the full LID of four hundred United States dollars per metric ton (US$400/MT).
The GCCP on September 24, 2020 issued a statement indicating our expectation of an increment in the farm gate price which was scheduled to be announced on 1st October, 2020. Though not what we requested for, the recent announcement of GHS 660 per bag of 64kilogram (about 28% increase over the price obtained in the just ended 2019/2020 crop year) of cocoa is not far from our expectation. Based on the working assumption of the Producer Price Review Committee (PPRC) of COCOBOD, which aims at ensuring that farm gate price is pegged at a minimum of 70% of the net Free on Board (FoB) price of cocoa beans, GCCP was of the opinion that farmers in Ghana receives a minimum of GHS672.6 per bag (64kg) of cocoa beans. This figure was arrived at using the lowest projected values available, including 80% of the $400 per tonne LID announced in July 2019.
The current price of GHS660 per bag of cocoa beans is commendable, noting that the Ghana Cocoa Board together with its pricing committee (Producer Price Review Committee – PPRC) appears to have offered fully the $400 LID to farmers as agreed on with chocolate and processing companies.
This is remarkable as it will cushion farmers in the midst of the Coronavirus pandemic. However, this also raises questions about what percentage of FoB price of cocoa was offered to farmers and at what exchange rate? By our internal projections, it does appear farmers received only 68% of FoB price at an exchange rate of $1:GH5.5, which falls below the PPRC threshold of 70% and far below the current Bank of Ghana year on year exchange rate of GH5.7.
This also raises another transparency issue of publishing the indicative figures that goes into deciding the price of cocoa annually.
As we commend the COCOBOD for this milestone, we also wish to point out the following:
The COCOBOD must strengthen its surveillance in order to curtail all factors that could hinder the farmer appreciating fully the LID. We specifically suggest that intensive monitoring at various depots and cocoa-sheds are undertaken, as well as, sensitization of farmers on how to escape weighing scale adjustment fraud by purchasing clerks (PCs) as reported in a 2019 SEND GHANA study. It is of great importance that the COCOBOD sanctions identified PCs who were caught in the Joy News “Missing Kilos” documentary in August this year as a deterrent to others, whiles we await implementation of electronic weighing scales next year.
The COCOBOD must ensure that various Productivity Enhancement Programmes benefit all farmers. Inputs distribution programme, including fertilizer and mass spraying must among others be equitably distributed and thus particularly ensuring that women farmers equally benefit, since the 2019 SEND GHANA study also revealed increased likelihood of exclusion of female farmers from both the fertilizer input and the mass spraying programme.
The COCOBOD must also ensure that farmers whose over-aged and diseased farms are being rehabilitated are compensated appropriately so as to motivate others from participating in the program
We strongly believe that when all these factors are properly addressed and implemented, it will to a greater extent improve farmer’s income and livelihood as anticipated by this price increment.
2020/2021 Cocoa Producer Price increased from GHS514 to GHS660 per bag
The increase, which was announced by President Akufo-Addo took effect from October 1, 2020. The new producer price is pegged at GHS10,560 per metric tonne of cocoa indicating that a bag of cocoa is now GHS660.
The current price per 64kg bag of cocoa, which stands at GHS514 had earlier been increased by 8.2 percent from GHS475 per bag.
The President made the announcement at the launch of the National Cocoa Rehabilitation Programme at Sefwi Wiawso in the Western North region today, September 24, 2020.
Living Income Differential
Touching on the unstable nature of cocoa prices on the world cocoa market, President Akufo-Addo stated that “it remains one of the biggest challenges to ensuring payment of decent farm-gate prices to our cocoa farmers”.
With Ghana and Cote d’Ivoire responsible for 65 percent of the raw cocoa beans used in making chocolates, the President bemoaned the fact that cocoa farmers from the two countries just US$6 billion from an over US$100 billion chocolate industry.
This, he explained, is the meagre return that hardworking farmers get from their toil.
“Government believes that value-addition to our cocoa, and the search for new markets, will make us more money than all the aid given to us by all the donor countries. We shall gain some dignity, and spare the donors the fatigue we have all heard about,” he added.
This, according to President Akufo-Addo, is the rationale for the Strategic Partnership between Cote d’Ivoire and Ghana, the common initiative of His Excellency President Alassane Ouattara of Cote d’Ivoire and himself, which is manifesting itself in a joint cocoa production and marketing policy, and which is already paying dividends.
“Today, I am happy to announce that Ghana and Cote d’Ivoire are receiving a Living Income Differential of US$400 per tonne of cocoa, which is an additional earning from the world market price for our farmers. The Living Income Differential is going to guarantee some stability to the producer price of cocoa and sustainability of the industry in Ghana and Cote d’Ivoire,” the President said.