GHANA has announced a significant 45 percent increase in the fixed farmgate price paid to cocoa farmers, aimed at boosting their incomes and curbing the smuggling of cocoa beans. Agriculture Minister Bryan Acheampong confirmed the price rise on Wednesday, marking the start of the 2024/25 cocoa season for the world’s second-largest producer.
The farmgate price will rise from 33,120 cedis per metric ton to 48,000 cedis ($3,070), a move anticipated earlier this month by the cocoa producer price review committee. This unprecedented increase, effective immediately, is intended to help farmers earn a fairer share of the buoyant global cocoa prices, which have been driven up by adverse weather and disease in both Ghana and neighbouring Cote d’Ivoire.
Cocoa prices on the global market have remained strong throughout the year, with Ghana and Cote d’Ivoire supplying over 60 percent of the world’s cocoa. Both nations have faced weather challenges and crop diseases, leading to a third consecutive market deficit, which has pushed prices even higher. To stabilise the sector and maintain the incomes of cocoa farmers, both countries coordinate their farmgate prices and supplies.
Minister Acheampong noted that a similar price rise is expected in Cote d’Ivoire next month, stating, ‘We don’t expect any huge gap in prices. The market is volatile, and we will continue to monitor it. If there is another price increase, both countries will have discussions.’
While the price increase has been welcomed by many farmers, there are concerns about its potential impact on smuggling. A cocoa hedge fund manager suggested to Reuters that the new price implies a market value of $4,715 per ton for Ghana, far below the $10,000 figure at which futures are currently trading. This disparity could encourage farmers to sell their beans through smuggling routes rather than to the state marketing board, Cocobod.
Ghanaian cocoa farmers are optimistic about an improved crop yield for the 2024/25 season, attributing this to better weather conditions and the rehabilitation of farms affected by disease and illegal mining activities. Acheampong now expects cocoa production to exceed the previously conservative target of 650,000 metric tons.
The minister also assured farmers that Cocobod has sufficient funds to purchase this season’s crop, even before the government secures a syndicated loan, which is expected to bring in up to $600 million. Last month, sources revealed that Cocobod is exploring a new funding model for its bean purchases, a move that could save over $150 million in interest payments.
In the previous season, the global rise in cocoa prices was not reflected in the farmgate prices offered to Ghanaian farmers, pushing many to sell their crops to smuggling rings, which have become increasingly sophisticated. This year’s price adjustment is aimed at curbing such illegal activities and ensuring that farmers receive fair compensation for their produce.
With the new price in place, Ghana’s cocoa sector hopes to strengthen its position and provide much-needed support to its farmers in the face of ongoing global market challenges.
Reuters
