The Ghana Civil-Society Cocoa Platform (GCCP) commends the Ghana Cocoa Board for its bold initiative of implementing a floor price and a living income differential (LID) aimed at improving farmers standard of living. The platform recognizes the massive significance of this initiative and its invaluable impact on the livelihood of cocoa farmers, and therefore applauds COCOBOD and its counterparts in Cote d’Ivoire for this bold initiative.
We recall that the initiative was introduced in July 2019 with Ghana and Cote D’Ivoire (that control over 60% of world cocoa production) agreeing on a floor price of $2,600 per tonne of cocoa beans and also an LID of $400 per tonne of cocoa to be paid by chocolate and cocoa processing companies to farmers commencing in the 2020/21 cocoa season. We followed the initial pushback from industry players and all the threats and compromises that had to be made for this ground-breaking initiative to be realized. The GCCP hails COCOBOD and their Ivorian counterparts for standing their grounds and realizing this tremendous milestone. We also recognize all the efforts being made by COCOBOD such as hand pollination of cocoa farms, rehabilitation of aged farms, farm pruning, distribution of fertilizers and supply of new and improved cocoa seedlings; all aimed at ensuring that farmers increase their production.
Our greatest concern in this milestone, however, is to see direct and obvious change in the farm gate price of cocoa beans, such that farmers’ income and living standard improve. Following several demands by farmers in expectation of an increment in upcoming farm gate price, it is worth noting that COCOBOD will be in a good standing to meet this expectation if the LID is implemented as scheduled. Considering the fall in international cocoa price as a result of COVID 19, it is imperative that the purpose for instituting the LID is realized and applied to make up for the loses.
Based on the working assumption of the Producer Price Review Committee (PPRC) of COCOBOD, which aims at ensuring that farm gate price is pegged at a minimum of 70% of the net Free on Board (FoB) price of cocoa beans, GCCP is of the firm opinion that farmers in Ghana should be receiving a minimum of GHS672.6 ($118.00) per bag (62.5kg) of cocoa beans. This figure was arrived at using the lowest projected values available including an LID of $400 per tonne as agreed.
The current International Cocoa Organization (ICCO) world cocoa market price (which averages Europe, New York and London futures) stands at $2,474 per tonne, of cocoa beans. Based on the 2019/2020 parameters for calculating the net FoB for cocoa beans, we expect the net FoB for 2020/2021 cocoa season to be not less than 90% of the prevailing world cocoa market price. In effect, we expect the net FoB price of cocoa beans to be not less than $2,227. By applying the PPRC working assumption of minimum 70% of net FoB going to farmers, that translates into $1,559 per tonne for the farmer. This figure is less the $400 LID that was instituted and charged by COCOBOD on all futures that have been sold so far. Assuming COCOBOD retains not more than 20% of the LID for stabilization against future price drops and cedi volatility, the cocoa farmer should receive minimum of $320 as LID on every tonne of cocoa beans sold.
In effect, when you put the farmers share of minimum 70% of net FoB ($1,557) and the minimum 80% of LID ($320) together, the Ghanaian cocoa farmer should receive not less than $1,879 per tonne of cocoa beans for the 2020/2021 cocoa season which translates into minimum GHS672.6 ($118) per bag (62.5kg) of cocoa beans. Using the year on year Bank of Ghana (BoG) exchange rate of $5.7, cocoa farmers are expected to receive not less than GH10,701 per tonne of cocoa beans which should translate into minimum GHS670 per bag of cocoa beans. Once again, these estimations are based on the minimum projected figures and the assumption that farmers will receive minimum 80% of LID. These are very conservative estimates and we expect the COCOBOD to be able to meet them with ease.
We celebrate government’s commitment to implement this initiative as agreed and are anxiously awaiting the announcement by COCOBOD on the farm gate price for cocoa in the 2020/2021 cocoa season. The GCCP once again congratulate COCOBOD for the bold efforts to safeguard the interest of Ghanaian cocoa farmers through the implementation of the floor price and LID.
About the Ghana Civil-Society Cocoa Platform (GCCP):
The Ghana Civil-society Cocoa Platform (GCCP) is an independent campaign and advocacy platform for civil society actors in the cocoa sector – comprising of Civil Society Organizations, Non-governmental Organizations, Community-based Organizations, Farmer-based Organizations, Farmer Associations, Media and interested individuals. The main aim of the platform is to advocate and influence cocoa sector policies and programmes. GCCP is currently being hosted by SEND Ghana, with membership across the country, especially in cocoa growing areas.
For further information, contact:
Sandra Kwabea Sarkwah (Coordinator) Obed Owusu-Addai (Co-Coordinator)
0245813232 or 0302716860 0240355320
Ghana Agricultural Rural Development Journalists Association
World Cocoa Farmers Organisation
Kooko Pa Farmers Association
Cocoa Abrabopa Association