For political actors who want a favorable narrative following the cocoa reforms announced by the Minister for Finance, the argument is that “the government has offered 90% Free on Board (FOB) price of cocoa to farmers.”
Rightly so, this 90% of the achieved FOB export price is set for the remainder of the 2025/26 crop season.
This decision is intended to protect farmers amid volatile world markets and sector liquidity challenges. Now the pressing question is: Does the mere offer of the 90% current FOB price to Ghanaian farmers make them better off than the previous price?
Let’s take a deep dive into the numbers practically.
What Has Changed?
Under the revised pricing formula announced on Thursday, Ghana has set a new farmgate price of GH₵41,392 per tonne (GH₵2,587 per 64 kg bag). This is indeed equivalent to 90% of the achieved gross FOB price of USD 4,200 per tonne.
Previously, producer prices under the 2025/26 season had been determined using a 70% of FOB benchmark, translated into a higher farmgate price earlier in the season when world prices were stronger.
Comparing Old and New Prices
The old or the earlier pricing for the 2025/26 cocoa season was set around 70% of FOB. This translated to about GH¢58,000 per tonne (GH¢3,625 per bag) when world market prices hovered higher.
With the new 90% of FOB, which currently hovers around USD 4,200, it translates into GH¢41,392 per tonne and GH¢2,587 per bag. This is significantly lower in cedi terms because global prices have fallen.
So while 90% sounds huge and generous in percentage terms, farmers’ actual local earnings have dropped because international cocoa prices declined. In other words, the base FOB figure used was lower. To put it simply, the pie (FOB price), based on which the 90% was computed, has significantly shrunk. In nominal terms, the new price is not automatically better for farmers compared with the earlier season rate.
Why 90% of FOB May Not Automatically Benefit Farmers
For players in the cocoa industry, the impact of paying 90% of FOB depends on two key conditions:
Global Cocoa Price Levels:
Farmers benefit most when world cocoa prices are high. If FOB values fall, as they have recently, then even a high percentage share can yield a lower absolute farmgate price than before, reducing farmers’ cash incomes.
Exchange Rate Movements:
The cedi-dollar exchange rate directly affects how much farmers receive locally. Even if FOB percentages are high, exchange rate volatility can erode real income in cedi terms.
The Commitment to 70% Going Forward
As part of the reforms, the government has also committed to helping farmers earn not less than 70% of the prevailing FOB price going forward. The Minister says this is going to be the baseline aimed at anchoring farmer earnings to global market trends while still safeguarding sector finances.
This 70% benchmark is a minimum commitment, meaning that if export prices rise or fiscal space improves, farmers could receive a greater share than this floor.
When Do Farmers Truly Benefit?
For the 90% FOB model to translate into higher real income for farmers, at least three conditions should align.
Farmers must pray for higher international cocoa prices in order to boost the FOB.
Moreover, there should be a favourable exchange rate to ensure local earnings don’t erode. This speaks to the strength of the cedi. A very strong cedi will automatically reduce farmers’ earnings in cedi terms.
Last, but not least, there must be timely and full payments to farmers. This has been a critical issue in recent seasons.
The Bottomline
On paper, the higher percentage share looks good because a higher share ensures farmers capture more export revenue when world prices rise.
However, real earnings or cash that enters the pocket of farmers depend on the level of world prices, so a high percentage of a low FOB doesn’t necessarily help farmers more.
That notwithstanding, the 70% minimum commitment provides a safety net, but its benefits depend on global price trends.
In essence, paying farmers 90% of the FOB price is a progressive policy in theory, aligning farmer income more closely with global values. But because global cocoa prices recently fell, the current adjusted farmgate price, even at 90%, may not make farmers better off compared to earlier, higher absolute prices.
