Ghanaian News

NPP to Mahama: You have no moral right to challenge government’s cocoa price increase

The New Patriotic Party has declared that the National Democratic Congress and its leader, John Dramani Mahama, lack the moral right to challenge the latest cocoa price increase or to make allegations suggesting that the Akufo-Addo government has shortchanged cocoa farmers.

According to the NPP, with achievements such as the highest producer price in 50 years, the cocoa farmers’ pension scheme and other far-reaching interventions, the Akufo-Addo government has shown unprecedented commitment to the well-being of Ghana’s cocoa farmers and will continue to do so to ensure a sustainable cocoa sector.

Other interventions by the current government to improve the lives of cocoa farmers are the novel living income differential (LID) and wholesale rehabilitation of disease-infested farmlands.

Addressing a press conference in Accra to counter negative claims by the NDC, the NPP’s director of communications, Richard Ahiagbah, pointed out that for the 2015/16 season, the then NDC government announced a producer price of $1,800 or GHC6,800 per tonne, representing 61.71% of the then gross freight on board (FOB) of $2,950 per tonne.

But this NPP government, he said, on Saturday (9 September) announced GHC20,943 or $1,821 per metric tonne for the 2023/24 season, which is 70.03% of the current weighted average FOB of $2,600 per tonne.

Ahiagbah explained that although this does mean that the weighted average FOB under the NDC government was $350 higher than what the current government has secured, the NDC paid 61.71% of the old FOB to farmers – 8.59% lower than the 70.03% of FoB the current government announced on Saturday.

Ahiagbah said these established facts expose the propaganda of the NDC and vindicate the NPP as the party that cares about the well-being of cocoa farmers.

Protect the farmer
The high producer price will enable farmers to improve their standard of living, invest in their farms and meet other financial obligations, Ahiagbah said, as well as reduce their vulnerability to economic shocks, leading to a more stable and secure livelihood.

He said he is hopeful that a higher producer price will also motivate the existing farmers to continue cultivating cocoa and encourage others to enter the business, which will contribute to the sustainability of the cocoa sector.

Ahiagbah said the high producer price equally has the potential to motivate many younger Ghanaians to pursue cocoa farming as a viable and legal alternative to other, often illegal endeavours, such as “galamsey”.

The NPP communications director further explained that the early scheduling of the announcement of the producer price for September, rather than the typical October, was done to give farmers timely access to funds to fulfil their financial responsibilities promptly.

Ahiagbah recalled how, when the world market price of cocoa plummeted from $2,950 in 2016 to $2,050 in 2017, rising only marginally from that low to roughly $2,350, the NPP government maintained the producer price and absorbed losses at enormous cost, purely to protect Ghana’s farmers.

“It is important to note that Ghana’s cocoa beans are mostly sold forward,” Ahiagbah said. “This means that the 2023/24 crop was sold between October 2022 and June 2023 at international prices ranging between $2,060 per tonne and $2,800 per tonne.”

He told reporters gathered at the press conference that the international price of cocoa then began to increase in April 2023, when a greater percentage of the 2023/24 crop had already been sold.

The forward sale strategy enables COCOBOD to give farmers a guaranteed price and raise the syndicated loan offshore to pay farmers promptly for their produce, he explained.

Producer price mechanism
Among other significant changes to the cocoa trade that Ahiagbah cited is the change in the producer price determination mechanism from net FOB to gross FOB.

“The difference is that, with the use of net FOB, the amount farmers are paid is arrived at after all industry costs had been deducted. With this method, farmers receive less of the total proceeds from the sale,” he said.

“However, with the change in the mechanism to gross FOB, the amount that farmers are paid is determined first before all other industry costs. This method ensures that farmers get more from the sale of the beans,” Ahiagbah said.

He added that there is also a reduction in industry costs, which are capped at a maximum of 40% of gross FOB and not net FOB.

Ahiagbah further recalled how President Nana Akufo-Addo liaised with his Ivorian counterpart, President Alassane Ouattara, to negotiate the $400 per tonne living income differential, which goes directly to farmers.

In conclusion, he outlined productivity enhancement interventions which have led to a boost in cocoa farm output, up from an average of 450 kilos of beans per hectare in the 2015/16 season to an average 650 kilos per hectare in 2022/23.

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