Anyone thinking that a massive increment in the price of cocoa in Ghana would have automatically transformed the livelihoods of farmers for the better should think again.
IMANI Africa says, higher cocoa prices do not necessarily translate into improved livelihoods of cocoa farmers.
In a new analysis, the policy think tank warns that despite the government’s recent increase in the producer price of cocoa, many farmers will still see little improvement in their day-to-day livelihoods.
The problem, IMANI argues, lies in low productivity and small farm sizes, not just the selling price.
IMANI’s analysis, cited by The High Street Journal, notes that using an average productivity estimate of 500 kg per hectare from its own research and other studies, the think tank calculates that a farmer could produce about 8 bags per hectare (each bag weighing 64 kg).
At the new price, that amounts to roughly GHC 25,830 per hectare per year, the maximum annual cocoa income for nearly 35% of farmers in Ghana, who cultivate less than one hectare.
For the majority, about 70% of cocoa farmers, who farm up to two hectares (five acres), the maximum annual income doubles to GHC 51,660. While that may sound impressive, IMANI breaks it down further to GHC 2,152.50 per month or just GHC 5.90 a day per hectare.
When viewed through this lens, the price hike’s limitations become clear as IMANI indicates that the farmers can’t spend what they don’t produce. This means a higher price per bag has little effect if farmers are producing too few bags to begin with.
“High prices do not necessarily translate to improved livelihoods. Using a midpoint productivity of about 500 kg/ha from IMANI’s data and existing literature, a farmer is likely to produce a maximum of about 8 bags/ha (using 64kg). This translates to a maximum income of GHC 25,830 per hectare, using the new price per 64 kg. Based on the agriculture census data, this could be the maximum annual cocoa income for almost 35 per cent of cocoa farmers in Ghana cultivating below 2 acres (less than a hectare),” the analysis indicated.
It added, “For about 70 per cent of cocoa farmers in Ghana cultivating up to 5 acres (2.02 hectares), the maximum annual cocoa income is GHC51,660. Using the maximum annual cocoa income per hectare as a benchmark, the monthly and daily cocoa income of the farmer would be GHC2,152.50 and GHC5.90, respectively.”
IMANI’s findings clearly unmask the real challenge in Ghana’s cocoa sector, which is mainly dominated by large smallholder farmers.
For price increments to have a real effect on farmers, there should be efforts to boost yields and productivity through better inputs, extension services, and farm management, rather than relying solely on price increases to lift farmers out of poverty.
This means the Ghana Cocoa Board will have to accelerate its efforts to help farmers boost their yield for price increments to cause significant yields in their livelihoods
