After the government announced sweeping reforms in the cocoa sector, one lingering controversial question is whether the government has been fair to cocoa farmers under the current Free-On-Board (FOB) pricing regime?
According to former Energy Minister and former MP, Dr. Kwabena Donkor, the answer to this critical cocoa sector question cannot be reduced to emotions or political chess, but rather, must be determined by data.
In an exclusive interview with The High Street Journal, Dr. Donkor challenged the growing narrative that the current administration has shortchanged farmers, arguing that the real debate should centre on percentages, purchasing power, and policy design.
For him, the real conversations should not overly focus on just the nominal cedi amount farmers receive.
The Core Question: Has the FOB Percentage Fallen?
Dr. Donkor insists that the starting point is what percentage of the FOB price is going to farmers?
Under the policy direction outlined by Finance Minister Cassiel Ato Forson, the government intends to pay farmers at least 70% of the FOB price. According to Dr. Donkor, current data suggests that the effective share has not declined, and may in fact have risen toward 90% for the current cocoa season.
For him, if the FOB percentage has not reduced, then the claim that farmers are being treated unfairly must be interrogated carefully.
“Has the FOB prize, being paid in 2013-2014, been reduced? If it has reduced, then we’ve been unfair to cocoa farmers,” he noted.
He added, “But if it has not, then the position that the government, I’m talking of the John Mahama government, has been unfair to cocoa farmers, will have to be determined by data. Has the FOB prize, the percentage of the FOB prize paid to cocoa farmers, reduced? No. As of now, it has even increased because they’re now doing 90%.”
The Exchange Rate Effect
Yet the controversy does not end there. Critics argue that despite a higher FOB percentage, farmers are receiving fewer cedis than before. Dr. Donkor acknowledges this reality but explains that it is largely driven by exchange rate appreciation.
He explains that if the cedi strengthens, you convert fewer cedis per dollar. However, he was quick to add that the real issue is whether purchasing power has improved.
For him, 100 Ghana cedis today cannot be compared to 100 cedis in 2024 without considering inflation and currency strength. While farmers may see fewer cedis on paper, the stronger currency potentially increases their purchasing power. The challenge, he says, is communication.
“There’s also the appreciation of the cedi. So that is the challenge. How do you communicate that indeed, in real cedi terms, in real purchasing power terms, you now have a better deal with a higher FOB percentage going to farmers?” he quizzed rhetorically.
Learning from the 1960s and 1970s: The Stabilisation Fund Model
Beyond the percentage debate, Dr. Donkor revisits history. He recalls that in the 1960s and 1970s, Ghana operated a stabilisation mechanism where a portion of the FOB price was set aside in good years. When global prices fell, that buffer was used to cushion farmers.
That system, he suggests, reduced volatility and provided predictability. For him, if the country is abandoning stabilisation and promising a fixed 70% of FOB, farmers must be educated about the consequences. They must appreciate that they will directly bear the swings of international market prices.
“When prices rise, you benefit. When they fall, you lose,” he explains.
The Case for a Modern Buffer
Ultimately, Dr. Donkor supports revisiting the idea of a buffer fund. He proposes setting aside a portion of the FOB revenue in good years to protect farmers during downturns.
However, he raises critical governance questions about who manages the stabilisation fund?
Will it be independently invested? Will it be within the central treasury? How will it be protected from the fungibility pressures of public finance?
Without strong institutional safeguards, such a fund risks becoming a fiscal plug rather than a farmer protection mechanism.
He said, “Those are issues that the think tanks and related institutions should be thinking about and bringing onto the policy table debate.”
The Real Debate: What Percentage of FoB is Ideal for Farmers
For Dr. Donkor, the fairness debate must rise above partisan lines. He argues that the central policy question is: What percentage of FOB should farmers receive, and how should Ghana manage volatility?
If the government maintains or increases the agreed percentage, accusations of unfairness must be tested against economic fundamentals. But if purchasing power erodes or stabilisation mechanisms are absent, farmers remain exposed to global shocks.
The issue, he concludes, is not just about how much farmers are paid today. It is about building a pricing framework that is transparent, sustainable, and historically informed.
