Ghana is set to announce a significant increase in the cocoa producer price for the upcoming 2023/24 crop season beginning September 8.
The cocoa producer price or farmgate price is the amount paid by the government to farmers for a 64kg bag of cocoa beans.
The highest farmgate price increase enjoyed by Ghanaian cocoa growers in the last 5 years was in September 2020 in respect of the 2020/21 crop season.
From GHS515 per bag, it was raised by an unprecedented rate of 28% to GHS660 that year on the back of the newly introduced Living Income Differential price mechanism.
The same price representing 87.15% of the net FOB value was maintained for the 2021/22 crop season in spite of the international market price collapse occasioned by the COVID-19 pandemic.
It was then raised to GHS800 per bag for the prevailing 2022/23 crop year, which represented a difference of 21% over the previous year’s price.
Although the amount constituted a whopping 89.99% of the net FOB value, it didn’t quite meet the expectations of cocoa farmers in view of high input cost, and a biting exchange rate crisis coupled with spiralling inflation.
The net FOB price of cocoa is achieved after Ghana Cocoa Board (Cocobod) has deducted all industrial costs including its scholarship fund, cocoa roads, mass spraying, fertilizer, and other yield-enhancing interventions.
Per the current cocoa producer price policy, the cocoa farmer is given a minimum of 70% of the net FOB value of the commodity, with the remainder shared among all other stakeholders, namely Licenced Buying Companies (LBCs), Cocoa Marketing Company, Quality Control Company, Cococod and the government.
But the current Minister of Agriculture, Bryan Acheampong, has conceded that cocoa farmers have for far too long been dealt a raw deal.
He has since hinted at drastic reforms including a “turnaround strategy” to salvage its heavily-indebted cocoa industry regulatory agency, Cocobod, while also doing right by cocoa farmers.
“For the first time in the history of this country, we have moved cocoa pricing from net FOB that is paid to farmers to gross FOB,” said Acheampong.
He promised the new cocoa pricing policy would deliver a “major change” in the livelihoods of the country’s cocoa growers. The gross FOB value of cocoa refers to the expected world price of the crop.
An industry expert who spoke to Cocoa Post on condition of anonymity said “Just moving the producer price from net FOB to gross FOB gives about a 17% increase.”
Also expected to contribute to an enhanced farmgate price for the upcoming crop season is a favourable international market price trend with the London futures market surging to 2,590 pounds per tonne in June, a 46-year high.
The source was convinced such development bode well for Ghana’s struggling cocoa sector, where low incomes have spurred the wanton sale of cocoa farms for illegal gold mining activities, known locally as galamsey.
The price reforms, he underscored, could serve as an incentive to attract the youth to the business of cocoa production, which is currently facing an acute labour shortage.
Ghana’s president Nana Akufo Addo is scheduled to provide more insights into the new producer price policy at a cocoa industry durbar on Saturday, 9 September 2023, at Tepa in the Ashanti Region of Ghana.
Preceding that on Friday 8 September 2023 will be the official announcement of the new cocoa producer for the 2023/24 crop season.
In a related development, the Ghana Civil-society Cocoa Platform (GCCP) has projected the farmgate price for the ensuing crop season to be pegged at a minimum of GHS1,380 per 64kg per bag.
GCCP says it expects the net country cocoa selling price (producer price) to be not less than $3,146.
Assuming COCOBOD gives all the $400 LID to the farmer, that brings the farm gate price to $2,162 per tonne ($135 per bag) for the 2023/2024 cocoa season.
“Using the year-on-year Bank of Ghana (BoG) exchange rate of $1:GHS10.2, cocoa farmers are expected to receive not less than GHS22,080 per tonne of cocoa beans which should translate into a minimum of GHS1,380 per bag of cocoa beans,” the group said.