Ghana, will pay cocoa farmers GH¢7,600 cedis (US$1,914) per tonne for cocoa beans, during the 2016-17 season, nearly a 12 percent increase, more than the last crop year, Deputy Finance Minister, Cassiel Ato Forson, said last Saturday as he announced the start of the new season.
This amount represents an increase in price of ¢800 per tonne or 11.76 percent increase. The increment is good news for cocoa farmers, who have been clamoring for a hike in prices. This could to a very large extent check smuggling of the cocoa beans by Ghanaian cocoa farmers along the Ivorian border into the nation’s western neighbour.
The new price, works out at GH¢ 475 per 64-kg bag, the main unit in which Ghana’s hundreds of thousands of cocoa farmers sell the crop for export. Cocoa regulator, Ghana Cocobod, is targeting production of 850,000-900,000 tonnes this season.
The new price, will go for GH¢475.00 per bag, a whopping GH¢50 cedis, higher than what it was previously sold for.
At a ceremony to commemorate this year’s national cocoa day in Tepa in the Ashanti Region, the Deputy Finance Ministe,r who is also the Chairman of Producer Price Review Committee, insisted that the new price takes immediate effect.
“Last year the average FOB per tonne of cocoa sold was US$2900 and this year the average FOB to be sold and in some cases have been sold forward is US$2950” he said.
Ghana is the world’s second-biggest cocoa producer, behind neighbouring Ivory Coast and cocoa is Ghana’s most important export crop, earning vital foreign exchange for a country.
“This change (the new price) is higher than … our major competitor, our neighbour Ivory Coast,” Forson told a durbar of hundreds of traditional chiefs and cocoa farmers in Tepa in the Ashanti region.
The purchase price is crucial to deter smuggling into Ivory Coast, which on Wednesday set its producer price at a slightly lower level of US$1.88 per kg.
Mr. Forson and Cocobod Chief Executive, Stephen Opuni, used the occasion to rally support ahead of the election, appealing to cocoa farmers, who reside in some of Ghana’s most tightly-contested regions.
Mr. Forson, said average production and the price paid to farmers, had risen more since the governing National Democratic Congress (NDC) took power in 2009, than during the previous eight years when the New Patriotic Party (NPP) was in charge.
“By the time John Dramani Mahama completes his second term a lot of roads will have been constructed in the cocoa sector,” Opuni said. Improving infrastructure is one of Mahama’s key campaign themes.
The cocoa year, runs from October to September, and the crop year that has just ended was hampered by an unusually long dry season and fell short of the government’s target of 850,000.
A final production figure, has yet to be announced though it would be more than the disappointing output of 740,000 tonnes in the previous season, officials said. One cocoa official said, a count two weeks ago, put total purchases at 776,000 tonnes.
The Deputy Finance Minister, charged the License buying companies to ensure that the farmers are paid the new price at the point of sale.
Cocoa, has been a major foreign exchange earner for the country, and rakes in millions of dollars in revenue annually.
On Thursday, Ivory Coast, the world’s biggest cocoa producer, announced a 10 percent increment to its farmers for their beans.
Growers will get a minimum 1,100 CFA francs ($1.86) a kilogram (2.2 pounds) for beans for the main crop starting in October, according to Abdourahmane Cisse, the country’s budget minister. That’s up from 1,000 CFA francs last season. The main crop runs from October to March.
“My own view is that prices are maybe a bit too high but it’s still totally sustainable,” Edward George, head of research at Ecobank Transnational Inc., said by phone from London.
Dry weather has hurt the crop after the Harmattan — dry winds that blow over West Africa from the Sahara desert — was the worst in three decades. Traders including Cargill Inc., Olam International Ltd., Sucres et Denrees SA and Armajaro have forecast large shortages in the year ending in September.
“The worry is that a lot of beans that have not been sold have stockpiled and now are going to be mixed in with the main crop to get rid of them,” George said. “I can imagine a lot of buyers are not very happy that the prices have gone up and they know that part of the cocoa they are going to buy is going to be sub-standard.”
Production dropped 13 percent to 1.565 million metric tons for the 2015-16 season, Bruno Kone, a government spokesman, told reporters in Ivory Coast. Exports for the season fell 4.9 percent to 1.548 million tons, Kone said.
Cocoa futures in London climbed to a six-year high in July as the Harmattan reduced output from the smaller of two annual crops in West Africa. Prices have dropped 4.5 percent in the past three months.
Poor bean quality is also affecting processing, with the Ivory Coast expected to lose its spot at the top cocoa processor to the Netherlands this year, according to the International Cocoa Organization. Grindings will be 510,000 tons in 2015-16, down 8.6 percent from a year earlier, Laurent Pipitone, director of economics and statistics division, said at a conference in London on Tuesday.
Cocoa for December delivery declined 1.5 percent to $2,825 a ton in New York Wednesday, extending the drop this year to 12 percent. It retreated 1 percent to 2,263 pounds ($2,945) a ton in London.