Ghanaian cocoa farmers can expect some relief as the government plans to increase the price paid to them by 45% for the 2024/25 season, according to a report by Reuters.
This move follows a previous 58% increase implemented in April of this year, which raised the guaranteed farmgate price to GH¢33,120 per metric tonne.
The April adjustment was driven by a similar price increase in Ivory Coast, the world’s leading cocoa producer. Ghana’s neighbour raised its farmgate price to 1,500 CFA Francs (GH¢39.58) per kilogram for the 2023/24 mid-crop season, amounting to approximately 1.5 million CFA Francs (GH¢39,580) per metric tonne.
With the latest proposed 45% increase, the price is expected to rise to GH¢48,000 per metric tonne, which equates to GH¢3,000 per 64kg of cocoa. This new price is anticipated to take effect in late September, just in time for the 2024/25 cocoa season.
While this increase is a positive development for farmers, the proposed price still falls short of the current world market price of cocoa, which stands at about $9,668.98 (GH¢154,703) for spot prices and $7,545 (GH¢120,720) for futures. Given that Ghana sells a large portion of its cocoa on the futures market, the proposed GH¢48,000 per metric tonne represents about 40% of what the country earns from exporting cocoa beans.
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The government’s decision to increase the farmgate price is part of a broader strategy to improve the livelihoods of cocoa farmers, many of whom have been adversely affected by low prices, rising living costs, and delayed payments. Additionally, this move aims to curb the smuggling of cocoa beans to neighboring countries, where prices are more attractive due to disparities in farmgate prices.
The proposal is pending cabinet approval, and sources suggest it is unlikely to be altered, as raising the price beyond this level could lead to a deficit for the Ghana Cocoa Board (COCOBOD), the regulatory body overseeing the cocoa industry.
Meanwhile, there has been ongoing debate over the source of funds to purchase cocoa, with COBOBOD and the Ministry of Finance expressing differing opinions. Joseph Boahen Aidoo, CEO of COCOBOD, previously announced that the regulator would forgo plans to borrow from foreign banks. However, Finance Minister Mohammed Amin Adam later clarified that loan syndication talks are still in progress, though they are not expected to raise more than $600 million.
