Ghana has implemented the imposition of a US$400 per metric tonne premium on future prices of cocoa, amounting to a 21% rise in the crop’s farmgate price.
Ghana is the world’s second-largest producer of cocoa; only neighbouring Côte d’Ivoire produces more.
The increase in the farmgate price for cocoa means that farmers will now receive GHC625 per 64-kilogram bag of cocoa beans, or GHC10,000 per tonne.
The new prices will take effect for the harvest season that commences on 1 October and continues through September 2021.
Currently, cocoa farmers in Ghana sell their beans at GHC515 a bag (GHC8,240 per tonne).
Put a LID on poor prices
The 21% rise in the farmgate price for cocoa has been made possible by the implementation of the Living Income Differential (LID).
In July 2019, Ghana and Côte d’Ivoire announced that farmers’ pay will rise significantly when the LID is implemented.
The two countries have been collaborating to find common ground that will alleviate farmer poverty. Their discussions led to an agreement to establish a price floor of US$2,600 per tonne and an LID of US$400 per tonne.
However, this pricing mechanism divided opinion among traders, as the premium could not be hedged.
Meanwhile, Ghana Cocoa Board (COCOBOD) has refused either to confirm or to deny the rise in farmers’ pay.
COCOBOD’s deputy chief executive in charge of operations, Emmanuel Adem Opoku, said an official announcement will be made on 1 October.
However, Reuters quotes an anonymous source at COCOBOD who confirmed the increase in farmgate prices.
“Farmers will get at least GHC10,000 for a tonne. This has been as a result of the implementation of the LID,” the source said.
Côte d’Ivoire also plans to raise its fixed farmgate price by 21% to 1,000 CFA francs (equivalent to $1.84) per kilogram in the next season.
E A Alanore