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Sun, Sep

GHANA, CÔTE D’IVOIRE TO BOOST FARMER INCOMES BY SELLING COCOA AT $2,600 FROM 2020/21

Business & Economy

The chief executive of the Ghana Cocoa Board (COCOBOD), Joseph Boahen Aidoo, has announced that all cocoa produced in Ghana and Côte d’Ivoire will be sold at a minimum $2,600 per tonne free on board (FOB) ‒ the equivalent of $2,700 cost insurance freight (CIF) ‒ from the 2020/21 season onwards.

The chief executive of the Ghana Cocoa Board (COCOBOD), Joseph Boahen Aidoo, has announced that all cocoa produced in Ghana and Côte d’Ivoire will be sold at a minimum $2,600 per tonne free on board (FOB) ‒ the equivalent of $2,700 cost insurance freight (CIF) ‒ from the 2020/21 season onwards.

The announcement on Monday followed determined efforts by the two countries to be the first cocoa-producing nations to fix the price at which their cocoa is sold.

Côte d’Ivoire and Ghana produce 65 per cent of global cocoa output each year between them, including some of the highest-grade produce in the world.

How it began

An agreement in principle for a floor price mechanism for selling cocoa produced in Ghana and Côte d’Ivoire was first reached at a two-day stakeholder engagement meeting in Accra on June 11 and 12. The two strategic partners called the meeting to discuss ways to achieve sustainable and fair incomes for cocoa farmers with buyers, processors and the leading players in the cocoa product-making industry.

A technical committee, made up of a working group from Ghana, Côte d’Ivoire and representatives of trade and industry, was tasked with working out processes for the smooth implementation of the agreed minimum price.

After extensive deliberations at a meeting of the technical committee in Abidjan on July 3, the two countries decided to implement the floor price proposal by settling on a fixed living income differential of $400 on every tonne of cocoa sold by both countries from the 2020/21 season onward. Briefly put, whatever the going price is, $400 from the sale of every tonne of cocoa will be set aside, guaranteed to go directly to farmers.

Secure income

Addressing a press conference at Cocoa House in Accra on Monday, Mr Boahen Aidoo said the Abidjan engagement had confirmed that all cocoa from Ghana and Côte d’Ivoire will be sold at $2,600 FOB/$2,700 CIF per tonne, starting from the 2020/21 season.

A fixed living income differential (LID) of $400 will apply to all categories of beans, he also confirmed.

“Given that 900,000 metric tonnes of cocoa was produced last year in Ghana, if the LID of $400 had existed then, an extra amount of $360 million in addition to last year’s total revenue would have accrued from the income of cocoa processors to the income of Ghanaian cocoa farmers,” said the COCOBOD chief executive.

It will be a good way of redistributing income along the cocoa value chain, Mr Boahen Aidoo said, to ensure that cocoa farmers can also earn a good income from their produce and begin to enjoy a better standard of living.

Roadmap

Under the roadmap for implementation of the floor price mechanism, the partners have agreed that farmers in both countries will be guaranteed a minimum of 70 per cent of the $2,600/tonne FOB floor price. This will be legislated for by both countries.

When the achieved average gross FOB price at the end of the cocoa season is between the minimum of $2,600 ($2,700 CIF) and $2,900 ($3,000 CIF), the farmer will be entitled to bonus payments.

Stabilisation fund accounts will be established under the co-operative Ghanaian/Ivorian cocoa initiative, governed by the provisions in its charter. Two accounts will be set up, one for each country, through a secretariat in Accra.

Any extra value above $2,900 gross FOB or $3,000 CIF of the achieved weighted average, which is determined at the end of each fiscal year, will be placed in these accounts.

The sole reason for disbursement of funds from the stabilisation fund will be to support the achieved weighted average if it falls below $2,200 FOB gross ($2,300 CIF), so that farmers can still be paid $2,600 per tonne of cocoa.



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