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Cocoa: ₵1,308 farm-gate price ‘total rip-off of poor farmers’ – John Mahama

11th September 2023

The Akufo-Addo/Bawumia/NPP government has, “once again, shortchanged Ghanaian cocoa farmers”, former President John Mahama has said in reference to the GH₵1,308 farm-gate price recently announded by President Nana Akufo-Addo.

 

In a statement, Mr Mahama said the announced increment “is a total rip-off as cocoa farmers will continue to remain worse-off than they were seven years ago under the NDC/Mahama government”.

He noted that the Spot Price of cocoa on the international market has surged to a record-high of about $3,600 per metric ton as at 31st August, 2023.

“This price is the highest since 1977 – that is, in the last 46 years”, he noted.

 

 

The flagbearer of the opposition National Democratic Congress said “one would have expected that with this historic increase in the international market price of cocoa, the Akufo-Addo/Bawumia/NPP government would have given our hard-working farmers their fair share”.

“Sadly”, he observed, “this government has once again decided to shortchange the already-impoverished cocoa farmer”.

“The announced farm-gate price of GH₵1,308 per bag of cocoa constitutes a paltry 52.7% of the Free-On-Board (FOB) Price of cocoa on the international market, as against the 66% of FOB Price which was given to cocoa farmers for the 2016/2017 cocoa season by the NDC/Mahama government”, he said.

Read Mr Mahama’s full statement below:

 

 

SPEAKING POINTS ON THE RECENTLY ANNOUNCED FARM-GATE PRICE OF COCOA FOR THE 2023/2024 SEASON:

1. Intro; The Akufo-Addo/Bawumia/NPP government has once again shortchanged Ghanaian cocoa farmers. The announced increment in the farmgate price of cocoa to GH₵1,308 is a total rip-off as cocoa farmers will continue to remain worse-off than they were seven (7) years ago under the NDC/Mahama government.

2. The Spot Price of cocoa on the international market has surged to a record-high of about $3,600 per metric ton as at 31st August, 2023. This price is the highest since 1977 – that is, in the last 46 years.

• One would have expected that with this historic increase in the international market price of cocoa, the Akufo-Addo/Bawumia/NPP government would have given our hard-working farmers their fair share. Sadly, this government has once again decided to shortchange the already-impoverished cocoa farmer

 

 

3. The announced farm-gate price of GH₵1,308 per bag of cocoa constitutes a paltry 52.7% of the Free-On-Board (FOB) Price of cocoa on the international market, as against the 66% of FOB Price which was given to cocoa farmers for the 2016/2017 cocoa season by the NDC/Mahama government.

Government’s formula for Cocoa Price Determination – 2023/2024

• F.O.B Price per ton (World Market) $3,600

• Exchange rate GH₵11.03 as at 08/09/2024

F.O.B per ton (16 bags of cocoa) GH₵39,708

• F.O.B per bag GH₵2,481.75

• Farmer’s share per bag GH₵1,308.00

• Government’s share GH₵1,173.75 • Farmer’s share 52.7%

• Government’s share 47.3%

Formula for cocoa price determination – 2016/2017 under the erstwhile NDC/Mahama administration

• F.O.B Price per ton (World Market) $2,950 • Exchange rate GH₵3.90

• F.O.B per ton (16 bags of cocoa) GH₵11,505

• F.O.B per bag GH₵719

• Farmer’s share per bag GH₵475 • Government’s share GH₵244

• Farmer’s share 66.06%

• Government’s share 33.94%

NB: Thus, whereas President Mahama and the NDC gave cocoa farmers a farm-gate price of 66% of the international FOB price in 2016, the insensitive Akufo-Addo/Bawumia government government has given the impoverished cocoa farmer a paltry 52.7% of the international FOB price for the 2023/2024 cocoa season. 4. It is also noteworthy that apart from the high international spot price of $3,600 per ton, Ghana by virtue of our best quality cocoa received the highest premium of $497 per metric ton in June 2023, compared to $344 for the same period last year.

When this premium is factored into the farmgate price determination formula, the F.O.B price per bag increases from GH₵2,481.70 to GH₵2,824.35.

* This means that, the Akufo-Addo/Bawumia government is retaining a whopping GH₵1,516 while giving the poor cocoa farmer only GH₵1,308 per bag of cocoa.

* This reality further highlights the insensitivity and wickedness of the Akufo-Addo/Bawumia government which has dealt a raw deal to cocoa farmers since coming into office. 5. The evidence points to the fact that the Akufo-Addo administration has the worst record in terms of increases in cocoa prices in Ghana as they are the first government in the history of the Fourth Republic which refused to increase the farmgate price of cocoa for three consecutive seasons – 2019/2022, 2020/2021 and 2021/2022 cocoa seasons.

* Given the fact that this government failed to increase the farmgate price for all these years despite high inflation, we hold the view that this government should have given the cocoa farmer at least 65% of the international F.O.B price as they promised in the 2023 mid-year budget review statement.

6. Despite, the recent increase in the farmgate price, the cocoa farmer is worse-off today due to the alarmingly high rate of inflation which currently stands at 43.1% as at July 2023. The ever-rising rate of inflation has eroded and continues to erode the purchasing power of cocoa farmers.

* For instance, the evidence shows that with a farmgate price of GH₵475 per ton of cocoa in 2016 under the NDC/Mahama government, a cocoa farmer could purchase 18 bags of cement at an average unit cost of GH₵26.00. Yet today, that same cocoa farmer even with the recently-announced price of GH₵1,308 can only purchase 15 bags of cement at an average unit cost of GH₵85. * In similar vein, the 2016 farmgate price of GH₵475 could purchase for the cocoa farmer two packets of roofing sheets at an average unit cost of GH₵220 and leave him with a change of GH₵35 for incidental expenses. However, even with the recently-announced price of GH₵1,308, the farmer can only afford just one packet of roofing sheet at an average unit cost of GH₵1,200.

* Similarly, with a farmgate price of GH₵475 in 2016, the government of President Mahama and the NDC was giving the cocoa farmer free fertilizer. Sadly today, the cocoa farmer has to buy fertilizer at an average unit cost of GH₵500.00.

* In addition to this, prices of Weedicides have gone up astronomically such that today the price of “Akate Master” which used to be about GH₵30.00 in 2016 is today being sold at GH₵100.00, while “Condemn” which used to be sold at about GH₵10.00 is now selling at about GH₵45.00.

* Even worse is the fact that, unlike the NDC/Mahama government, the Akufo-Addo/Bawumia/NPP government has canceled the payment of bonuses to cocoa farmers since it took office in 2017. Rather, government has been paying bonuses to staff of Cocobod at the time Cocobod is incurring huge losses. * It is an incontrovertible fact from this comparative analysis, that the cocoa farmer is far worse off today than he/she was seven years ago.

7. Ironically, whereas government continues to retain a higher percentage of the international F.O.B price of cocoa, while giving farmers a paltry pittance, COCOBOD has been recording huge losses and indebtedness as a result of crass mismanagement in the last six (6) years.

* Below are details of the losses incurred by COCOBOD under the Akufo-Addo/Bawumia administration:

Year Losses 2017 GH₵395 million

2018 GH₵78.2 million

2019 GH₵320.6 million

2020 GH₵426 million 2021 GH₵2.4 billion

* It is sad to note, that for the first time in the history of Ghana, COCOBOD has defaulted on its short-term obligations since the introduction of Cocoa bills by the Bank of Ghana in 2002. Payment of cocoa bills amounting to almost GH₵8 billion has been postponed as part of the Domestic Debt Exchange Program currently being rolled out by Cocobod.

8. Even more worrying, is the significant drop in cocoa production volumes from 969,000 metric tons in the 2016/2017 cocoa season to just about 650,000 metric tons currently, the lowest in the last fifteen (15) years.

* The sharp decline in cocoa production volumes under the watch of President Akufo-Addo and Alhaji Bawumia is largely due to the increased spate of galamsey and the gross mismanagement of the cocoa sector. * This reality of declining cocoa production volumes translates into less disposal income for cocoa farmers which eventually reduces the quality of life of the cocoa farmer.

* Recent reports indicate that about 81% of farmlands in the Eastern region, 74% in the Western region and 68% of farmlands in the Ashanti Region have all been affected by illegal mining. This situation is fast collapsing the cocoa sector and must be addressed urgently to salvage the cocoa industry.

9. Today, the gross mismanagement of the cocoa sector which has occasioned huge indebtedness to COCOBOD, has made government unable to secure a syndicated loan facility for the 2023/2024 season.

* What this means is that, Licenced Buying Companies (LBC’s) who are already owed huge sums of money by COCOBOD are being starved of the needed funds to purchase cocoa beans from cocoa farmers. * This has created a situation where the already impoverished cocoa farmer is compelled to sell their cocoa beans on credit to LBC’s and wait until these companies receive funding from COCOBOD before the poor farmer gets paid for his toil. Even with the newly-announced farm-gate price, cocoa farmers will have to largely sell their cocoa beans on credit.

* This credit purchase system will further impose untold hardships on the already burdened cocoa farmer.

HARDWORKING COCOA FARMERS CERTAINLY DESERVE BETTER!

NCB-HQ

Written by Web Master

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