NDC Criticizes Government Over GHS 48,000 per Tonne Cocoa Pricing, Calls for Sector Reforms

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NDC Criticizes Government Over GHS 48,000 per Tonne Cocoa Pricing, Calls for Sector Reforms

Ghana’s recently announced farm-gate price for cocoa has raised concerns about the future of its cocoa industry, as farmers and market analysts question the government’s decision to fix prices far below international market levels.

The National Democratic Congress (NDC), led by its Spokesperson on Agriculture and Agribusiness, Harry Ekow Yamson, has delivered a sharp critique of the government’s pricing strategy, calling for urgent reforms.

The global cocoa market has seen a significant rally, with prices currently standing at approximately $9,500 per ton. Analysts anticipate further increases, with some projections placing prices as high as $10,171 by the end of September 2024 and potentially $12,000 per ton in the months to come.

In contrast to these rising international figures, the Ghanaian government has set the 2024/25 farm-gate price at GH₵3,000 per 64kg bag, or approximately GH₵48,000 per ton. This decision has sparked dissatisfaction, particularly as it offers only 32% of the current international price when converted at an exchange rate of GH₵15.5 to the dollar.

Missed Opportunity for Farmers

The gap between international and domestic cocoa prices is stark. At $9,500 per ton, a ton of cocoa on the international market is worth roughly GH₵147,250, or GH₵9,203 per 64kg bag. Even before factoring in the premium payments that Ghana’s high-quality cocoa typically attracts, the farm-gate price falls dramatically short.

The announcement has thus reignited long-standing frustrations among Ghanaian cocoa farmers, many of whom have seen their earnings eroded by a combination of rising living costs and low farm-gate prices.

Mr Yamson argues that Ghana’s cocoa farmers are being significantly underpaid, especially given the expectation that global prices will rise further. By fixing a farm-gate price so far below international levels, the government, he contends, is missing a crucial opportunity to bolster the incomes of the country’s cocoa farmers during what is a favorable market environment.

In 2016, under the administration of President John Mahama, cocoa farmers received 66% of the international price—nearly double the share they are set to receive in the current season.

Absence of Forward Sales

One of the main criticisms leveled by the NDC against the current government is its failure to secure forward sales contracts for the 2024/25 season. Traditionally, the Ghana Cocoa Board (COCOBOD) has relied on forward sales to hedge against price volatility and ensure more stable revenue flows.

However, this year, the government has been unable to secure a syndicated loan that would support these sales. As a result, Ghana’s cocoa exports will be subject to spot market volatility, introducing significant risk into the equation.

Without forward contracts to lock in prices, Ghana’s cocoa sector is exposed to the unpredictable nature of the global cocoa market, leaving farmers vulnerable to sharp swings in prices.

The government’s inability to secure a syndicated loan is a symptom of broader financial challenges facing COCOBOD, which has seen its financial position deteriorate over the past several years.

COCOBOD’s Financial Woes

Mr Yamson’s critique also centers on COCOBOD’s ongoing financial difficulties, as evidenced by its mounting losses. According to reports from the Auditor-General, COCOBOD has recorded consecutive losses over the past six years, with deficits increasing from GH₵395 million in 2017 to a staggering GH₵4.2 billion in 2022.

The board has been unable to meet key debt obligations, including a default on GH₵13.5 billion in cocoa bills, leading to the first-ever restructuring of the country’s cocoa debt.

The NDC contends that mismanagement within COCOBOD has led to these mounting financial pressures, which have in turn exacerbated the difficulties faced by cocoa farmers.

The collapse of key institutions within the cocoa value chain, such as the Producer Buying Company (PBC) and the Cocoa Marketing Company (CMC), has further compounded the challenges. PBC employees, for instance, have reportedly gone without pay for over 13 months, while CMC is burdened with significant debt.

Decline in Cocoa Production

In addition to financial mismanagement, the NDC has highlighted a worrying trend in Ghana’s cocoa production figures. Since 2016, cocoa output has fallen from 966,000 metric tons to just 430,000 metric tons in 2024.

This decline, according to Mr Yamson, is directly tied to the low farm-gate prices offered to farmers, which have eroded incentives to increase production.

The smuggling of cocoa beans to neighboring countries, where farmers can fetch higher prices, has further undermined the sector.

The NDC argues that unless significant reforms are implemented, Ghana’s cocoa industry risks further decline, with both production levels and farmer incomes continuing to suffer.

Call for Structural Reform

In light of these challenges, Yamson has called for a comprehensive overhaul of Ghana’s cocoa sector. The NDC believes that only through structural reform—targeted at improving financial management within COCOBOD, ensuring fair pricing for farmers, and restoring transparency in the value chain—can the sector be revitalized.

The party has proposed a shift towards leadership that prioritizes equitable value distribution, reinvestment in production capacity, and a commitment to restoring COCOBOD’s financial health.

Ghana’s cocoa sector has long been a cornerstone of the country’s economy, accounting for a significant share of export revenues. However, without urgent intervention, Mr Yamson warns, the sector’s future is increasingly uncertain.

For Ghana to fully benefit from the current global price boom, the NDC insists that the government must address the fundamental issues plaguing the industry and work to secure a more sustainable future for the country’s cocoa farmers.