The president of Ghana, Nana Addo Dankwa Akufo-Addo, has announced the new cocoa producer price for the 2020/21 season as GHS10,560 per tonne translating to GHS660 per bag.
“Nananom, beginning 1st October 2020, I am happy to announce the award of a new cocoa producer price of GH¢10,560 per metric ton, equivalent to GH¢660 per bag for the coming 2020/21 crop year,” disclosed the President.
The new price represents a 28% increase over the current 2019/20 producer price of GHS515 per bag and is set to kick in at the start of the new season beginning 1st October.
President Nana Addo Dankwa Akufo-Addo made the announcement when he launched the Cocoa Rehabilitation Programme, in Sefwi Wiawso, as part of his 3-day tour of the Western North Region.
Cocoa Producer Price
The producer price is the price at which the country’s cocoa sector regulator – Ghana Cocoa Board (COCOBOD) – buys the produce of cocoa farmers at the farmgate.
The prevailing cocoa producer price for the 2019/20 season is GHS515 per 64kg bag of beans, which was an 8.42 percent increase over the GHS475 per bag in the 2018/19 season.
Living Income Differential (LID)
Besides announcing the 2020/21 producer price, President Akufo-Addo also officially launch the historic Living Income Differential (LID) bonus payment on every bag of cocoa purchased.
“By this new producer price, we have kept faith with our commitment, under the international arrangement with Côte d’Ivoire and global stakeholders, by awarding to our farmers the full four hundred United States dollars per metric ton (US$400/MT) Living Income Differential (LID),” he said.
The President continued, “By this substantial increase in the producer price, we are also delivering on our 2016 manifesto promise to reward handsomely the hard work of our cocoa farmers and their unequalled contribution to the economy of Ghana over the years.”
Touching on the unstable nature of cocoa prices on the international 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% of the raw cocoa beans used in making chocolates, the President bemoaned the fact that cocoa farmers from the two countries just received US$6 billion from the over $100 billion chocolate industry.
This, he explained, is the meagre return that hardworking farmers get from their toil.
Per the LID, cocoa farmers in Ghana and Ivory Coast will receive $25 or GHS145 ($1=GHS5.8 exchange rate) extra cash for every bag of cocoa they sell.
The amount is a direct payment of proceeds from a $400-per-tonne levy imposed on the terminal price of the commodity by Ghana and Ivory Coast in 2019, hoping to give cocoa farmers a decent income.
Per Ghana’s average output of 800,000 metric tonnes, an estimated total of $320 million in expected to be doled out directly to cocoa farmers this season.
$840 million will be available for payment to Ivorian cocoa farmers in LID bonus, going by the country’s production output of 2.1 million metric tonnes.
According to President Akufo-Addo, this underpins 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 (LID) of four hundred United States dollars (US$400) per ton 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.
Cocoa value addition
“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,” the president noted.