Cocoa farmers are pressing for a farm-gate price of GH¢1,380 per 62.5kg bag of cocoa beans, marking a substantial 72.5 percent rise from the current GH¢800 rate. With COCOBOD poised to unveil new prices for the upcoming 2023/2024 cocoa season in the coming days, the Ghana Civil Society Cocoa Platform (GCCP) conveyed their stance during a press conference held in Accra. They argue that this 72.5 percent increase is crucial to combat cocoa smuggling along Ghana’s western and eastern borders, as well as to support farmers in dealing with rising living costs and inflation.
GCCP, representing the interests of cocoa farmers, pointed out that neighboring countries with liberalized cocoa marketing systems had increased their farm-gate prices as the international cocoa market price appreciated. At one point this year, cocoa was selling for GH¢1,500 per bag in Togo, twice the rate paid to Ghanaian farmers. This situation fueled illicit cocoa smuggling, as some farmers were enticed by offers exceeding the prevailing market price in Ghana by 30-40 percent, leading to adverse consequences.
Leticia Yankey, a cocoa farmer and founder of Cocoa Mmaa, addressed the press conference and urged COCOBOD, the cocoa industry regulator, to promptly heed the group’s demands. GCCP firmly believes, based on the Producer Price Review Committee’s (PPRC) working assumptions, that Ghanaian farmers should receive a minimum of GH¢22,080 per tonne. This translates to GH¢1,380 per bag (62.5kg) of cocoa beans. The PPRC’s objective is to ensure that the farm-gate price constitutes at least 70 percent of the net free on board (FoB) price of cocoa beans.
Ms. Yankey elaborated that this calculation was based on conservative estimates, including the agreed-upon living income differential (LID) of US$400 per tonne and the current International Cocoa Organization (ICCO) world cocoa market price of US$3,647 per tonne of cocoa beans. It also considered the significant decrease in the origin differential/country premium, which had fallen from over US$400 to the current US$25.
Assuming COCOBOD allocates the entire US$400 LID to the farmer, the farm-gate price for the 2023/2024 cocoa season would be US$2,162 per tonne (US$135 per bag), given the year-on-year Bank of Ghana (BoG) exchange rate of US$1:GH¢10.2. Consequently, cocoa farmers should receive no less than GH¢22,080 per tonne of cocoa beans, which should translate to a minimum of GH¢1,380 per bag of cocoa beans.
“These are very conservative estimates, and we expect COCOBOD will be able to meet them with ease,” she added.
In the previous year, the government did not announce a new cocoa farm-gate price for the 2022/2023 crop season, which began on October 1, 2022. The last adjustment to the cocoa farm-gate price occurred in 2020 when it increased by 21 percent, rising from GH¢660 to GH¢800 per bag. This increase was attributed to the implementation of the living income differential, a pricing mechanism aimed at alleviating poverty among farmers.
Given the developments in the international cocoa market, cocoa farmers’ expectations for COCOBOD’s announcement on Saturday, September 9, 2023, are running high, according to Ms. Yankey.