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04.12.2007 Business & Finance

Ghana Bans Transit Of Foreign Cocoa Beans

Ghana has banned the overland transit of cocoa and cocoa waste from neighbouring states across its territory to stop it being used as a cover for smuggling Ghanaian beans out of the country, officials said last Friday.

Mr Stephen Ntim, the Deputy Chief Executive of industry regulator, Cocobod, told Reuters some foreign cocoa merchants who obtained customs permit to transport cocoa from Cote d' Ivoire through Ghana to Togo were found to have been smuggling beans produced in Ghana's high-yielding Western cocoa region.

"We did our search and found that these people were operating along the borders in the Brong Ahafo Region and part of the Western Region," he said.

Mr Ntim said significant volumes of Ghana's cocoa had been trafficked out of the world's number two cocoa producer through what he called this "cunning way of smuggling". But he declined to give an estimate of the amount involved.

Recently, Ghana's Commissioner of Customs ordered the cancellation of permits granted to foreign companies engaged in the overland transit of foreign cocoa beans and cocoa waste, but the government was now transforming this into an all-out ban.

Mr Ntim said although Ghana paid high farm-gate prices than its neighbours, including the world's leading cocoa grower, Cote d' Ivorie, merchants in those countries often preferred to have Ghanaian cocoa to mix with their stock and to improve its value.

Ghanaian cocoa is ranked among the world's best in terms of quality and enjoys a high premium. Mr Robert Kwabena Poku Kyei, the government's advisor on cocoa, said the ban was part of a general crackdown on smuggling.

"We're concerned about the activities of these people who all along had operated under the transit permit. They used it as an incentive for our cocoa to be smuggled outside," he said.

Local authorities in the eastern Volta Region, which shares a border with Togo, said smuggling of cocoa was on the increase and that they were setting up a task force of farmers, local chiefs and young people to combat the illicit trade.

"The region's future in terms of cocoa production is threatened and there is a need for us to rise up and combat the menace," District Chief Executive Solomon Donkor said.
He mentioned the Jasikan, Hohoe and Kadjebi growing areas as the main focus of the proposed task force in the east.

As part of the anti-smuggling efforts, Cocobod has been providing vehicles and incentives to a unit of the armed forces that patrols the country's borders to stop smuggling of cocoa from high yielding areas such as Western, Brong Ahafo and Ashanti regions.

Ghana now pays a farm-gate price of GH¢ 950 per tonne of cocoa, higher than the equivalent farm-gate prices in neighbouring countries, including Cote d' Ivoire.

In a related development, Cote d' Ivoire's government will reduce levies paid on cocoa exports by up to 6 CFA francs ($0.01) per kg from the 2008/2009 season in line with a World Bank request to improve farmer income, the global lender said.

"During our talks on (cocoa sector) reform, the finance minister agreed the government would reduce levies by up to five or six CFA per kilo next year," Bernard Harborne, the bank's country manager in Cote d'Ivoire, told Reuters late on Thursday.

Exporters pay 49.11 CFA ($0.11) per kg in levies used to fund a host of management bodies controlling the coffee and cocoa sector on top of an export tax of 220 CFA per ($0.50) kg but deduct this from the farm-gate prices they offer growers.

Growers in the world's top cocoa producer complain that both the export tax and levies are set too high and that funds they raise are mismanaged. The World Bank hopes that by reducing levies, more cocoa cash will end up in the farmers' pockets.

Cocoa farm-gate prices tend to rise and fall according to supply and demand in the bush but by reducing charges on exports buyers would be able to pass some or all of this increased profit margin to growers.

— Reuters