Windfall At 2020/21 Cocoa Sale: Ghana Bags Extra $40m
Ghana has earned $40 million extra revenue from the sale of cocoa beans for the 2020/21 crop season to be distributed to cocoa farmers.
The amount was grossed from the sale of 100,000 tonnes of next season’s cocoa beans, according to data sighted by the Daily Graphic.
The earnings are the fruits from the living income differential (LID) on the sale of Ghana's cocoa beans which was introduced in July this year.
The data showed that the beans were sold under the forwards contracts – a special arrangement that the Ghana Cocoa Board (COCOBOD) uses to sell the country’s cocoa beans well before they are harvested.
A source at the Cocoa Marketing Company Limited (CMC), a subsidiary of COCOBOD, confirmed the development in an interview.
It further explained that realising $40 million from 100,000 tonnes so far showed that the country was well on course to earning a total of $360 million from the LID, should it meet its 2020/21 production target.
COCOBOD is targeting 900,000 tonnes of cocoa beans for the 2020/21 crop season.
The LID was introduced in July this year by Ghana and Cote d’Ivoire as an income booster for cocoa farmers and their respective countries.
It requires that buyers of cocoa from either country pay $400 in extra revenue on every tonne of cocoa bought.
The amount is irrespective of the prevailing price of the crop in the international market and the individual country premium differentials on cocoa produced in the two countries.
The source, who was not authorised to speak on the issue, said: “The 100,000 tonnes was bought by different buyers and each buyer agreed to the new conditions governing the marketing and sale of our cocoa.
“Generally, there is a total buy-in from stakeholders now and that is how come we were able to earn this amount,” it said.
The development comes after global chocolate manufacturer, Mars Incorporated, threw its weight behind the LID and further asked stakeholders in the sector to do same to boost farmer incomes.
Last week, the Global Vice-President of Cocoa at Mars, Mr John Ament, told participants in the 2019 WCF partnership meeting in Berlin, Germany that the LID was "a robust and transparent process that ensures that the additional income reaches each farmer.”
When contacted, a source at COCOBOD also corroborated the authenticity of the data and explained that any amount that would be realised from the LID would go a long way to boost the incomes of farmers and protect them against the impact of a drop in cocoa prices.
It said the results of the LID policy “is an indication that something good can happen to the farmer.”
“We at COCOBOD cannot wait for the farmer to start benefiting from it. It will lead to improved remuneration for the farmers, better planning for the farmer and something to cushion them in the event of a price fall,” the source said.
It said the board was keen on ensuring that the country operated a cocoa sector that placed priority on the remuneration of the cocoa sector.
Using the recent fall in the prices of cocoa beans, it said the availability of a policy such as the LID would have insulated the farmers against the impact and ensured that the government did not have to come in to subsidise for the farmers.
Under the LID, Ghana and Cote d’Ivoire have agreed to pay 70 per cent of the achieved price on every tonne of cocoa to the farmer, should the price stay below $1,950 per tonne.
However, should the price exceed the $2,950 per tonne mark, the excess would be invested in a Cocoa Stabilisation Fund to be used to cushion farmers whenever the free on board (FOD) price is below $2,600.
Mode of sharing
The COCOBOD source indicated that as the regulator of the cocoa sector, COCOBOD was well aware of its responsibility to the farmer and the country as a whole and would ensure that it used superior policies and programmes to sustain the cocoa sector.
It observed that the LID, which was a departure from the status quo of marketing Ghana’s cocoa beans, was key to the sustainability of the cocoa industry.
The source, thus, charged all stakeholders “interested in the sustainability of the cocoa industry to be prepared to lend their support to this system.
“Of course, the responsibility is also on the farmers, in that if you are well remunerated, then you must ensure that you produce sustainability and then ensure that issues such as child labour and deforestation are not entertained,” it added.