Senyo Kpelly, the Chief Executive Officer of Savannah & Sahel Commodities Ltd, has described Ghana’s newly announced minimum producer price for raw cashew nuts as a protective policy tool aimed at safeguarding farmers’ investments rather than fixing market prices.
Speaking in an interview with The High Street Journal (THSJ), Mr. Kpelly explained that minimum pricing frameworks, similar to those used in cocoa and other regulated crops, are designed to ensure farmers do not sell below the cost of production, which could threaten the sustainability of the entire value chain.
“The minimum price is not the market price,” he said. “It is a protective mechanism. It looks at the cost of production, average input costs and allows for a reasonable profit margin, maybe 20 to 25 percent so that farmers do not lose their investment.”
According to him, selling agricultural produce below production cost ultimately discourages farmers from continuing production, leading to long-term supply shortages and instability within the industry.
“If farmers lose money this year, they won’t produce next year. And once that happens, the whole industry collapses,” he noted.
Mr. Kpelly said the newly announced GHS12 per kilogram minimum price for raw cashew nuts is expected to cover key production costs, including labour, land preparation, inputs and the farmer’s time, while allowing room for profit that encourages reinvestment.
“When you invest in cashew farming, you need numbers to project your returns. You consider land preparation, labour, inputs and post-harvest handling. If, after all that, there is profit, it encourages farmers to invest more,” he said.
He added that a well-calculated minimum price could encourage farmers to expand their farms, but cautioned that pricing decisions must also reflect realities on the demand side of the market.
“You don’t only look at the farmer. You must also consider whether the buyer can sell the product. That is why minimum pricing must balance production costs and prevailing market prices,” he explained.
Mr. Kpelly also warned that poorly aligned pricing could encourage cross-border trade and smuggling, particularly in border communities where farmers may sell to buyers from neighbouring countries if prices are more attractive.
“We are a border country with porous borders. Farmers will sell wherever prices are better. If Ghana’s pricing discourages farmers, produce will move across borders,” he said, adding that this creates losses for the local industry and export earnings.
One of Mr. Kpelly’s key concerns is the use of a fixed minimum price in Ghana cedis for an entire season, despite cashew being an export commodity traded in US dollars.
He argued that the cedi’s volatility makes a static local-currency price problematic, especially when exchange rates shift significantly within a season.
“All trading is happening in foreign currency. If the cedi appreciates or depreciates sharply, the minimum price either becomes too expensive or meaningless,” he said.
To address this, he called for minimum prices to be linked to the dollar and reviewed periodically, possibly monthly, to reflect exchange rate movements.
“We cannot have one minimum price for the entire season. The minimum price must move with the exchange rate for it to work effectively,” he stressed.
Beyond pricing, Mr. Kpelly highlighted the need to build Ghana’s local processing capacity to compete with countries such as India and Vietnam, which dominate global cashew processing despite sourcing raw materials from West Africa.
“If India can import raw cashew from West Africa, pay logistics costs, process it and still export competitively, then clearly processing efficiency is the real issue,” he said.
He argued that minimum pricing alone would not make Ghana competitive unless local processors are supported to meet international standards and achieve scale.
“The minimum price has nothing to do with efficiency. Processing capacity and competitiveness are what will allow Ghana to truly benefit from its raw materials,” he added.
Mr. Kpelly said that while the minimum producer price policy is well-intentioned and aligned with the mandate of the Tree Crops Development Authority, its success depends on flexible implementation, currency realities and coordination across the entire value chain.
“The goal is to promote production, protect farmers, secure raw materials for processors and grow exports. But it must be done holistically and adjusted to market realities,” he said.
