Government is being urged to tie farmgate price for cocoa in Ghana to international market price to avoid the current under recovery. The country’s cocoa sector is facing mounting scrutiny as domestic prices continue to diverge sharply from the international market, creating a surplus exceeding 300,000 tons.
As Cabinet meets on the cocoa crisis, Analyst Peter Dadzie is drawing attention to the wide gap, noting that Ghana’s gross Free-on-Board (F.O.B) price for international traders stands at $7,200, while farmers receive around $5,370 at the farmgate. By contrast, the international market price fell to $4,448 in late January, “about 17% and 38% less than the farmgate and F.O.B prices, respectively.”
He said the mismatch, combined with declining global demand and limited liquidity, has fueled the growing surplus. “The declining demand for cocoa and unavailability of liquidity have created a surplus of over 300,000 tons in Ghana,” Dadzie said.
He observed, “If cocoa were an agricultural crop and not a political crop in Ghana, the farmgate price would have automatically dropped in line with the international market price to enable farmers to sell their produce.”
Dadzie warned of urgent government intervention. “Being a political crop, a bailout is needed from the government immediately to protect farmers’ livelihoods and the environment,” he said.
Looking ahead, he recommended tying farmgate prices to international market trends while ensuring farmers earn a living income. “It would be in the interest of the farmer and the government to peg the farmgate price to the movements in the international market price and the exchange rate.
Again, a floor price could be set to ensure farmers receive a living income to uplift them from poverty and keep them in business. Farmers must also be empowered to deal directly with international traders and chocolatiers without heavy intervention by the government. It’s time to free cocoa to generate more returns for farmers and the country at large,” he concluded.
Farmers have threatened to go on demonstration next week if government fails to pay for produce bought since late last year. The crisis threatens the cocoa industry which remains a backbone of the Ghanaian economy. The crunch Cabinet meeting is therefore expected to find short term solution to the current challenge while efforts are made to resolve the financing challenges bedeviling Ghana Cocoa Board.
