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GOVERNMENT HOLDS COCOA PRICE STEADY TO IMPROVE FARMERS’ WELFARE

General News

The Ministry of Food and Agriculture has explained that the New Patriotic Party government maintained the price of cocoa at GHC7,600 per metric tonne to show its commitment to improving the welfare of the Ghanaian cocoa farmer.

At a press conference yesterday on the producer price for the 2018/19 crop year, the ministry explained that it was important to dispel the current misinformation being peddled by the Minority NDC in Parliament.

“We in the ministry recognise the importance and critical role the food, agriculture and cocoa affairs select committee of Parliament plays in the activities of the industry. However, we are shocked by the partisan nature of Minority members of the committee and their handling of such a critical national issue,” the statement read.

 
Unanimous consent

According to the Ministry, barely two months ago it was in Parliament to discuss with the select committee the challenges facing the cocoa sector and also to seek its approval for a syndicated loan of US$1.3 billion for purchases of cocoa in the 2018/19 crop season.

It said that at this meeting the committee gave its unanimous consent for procurement of the syndicated loan.

Expanding on how the producer price is determined, the ministry said the general principle underlying determination of the producer price is to pay the farmer a minimum price of 70 per cent of the net FOB achieved on the world market.

“Therefore, we don’t have any NPP or NDC formula, but rather a universal formula which we wish to explain to the whole country in the course of our delivery,” a representative of the ministry said.

With regard to the 2016/17 cocoa season, the ministry recalled that when the NDC was in power, the world market price averaged $2,950. Using the then prevailing exchange rate of GHC3.95 to the dollar, that was the equivalent of GHC11,652.50. At the same exchange rate of GHC3.95, the total FOB value would be GHC9.9bn.

Keeping the faith

“[Afterwards] the industry cost is then deducted before arriving at the net FOB, 70 per cent of which should be the least farmer price. In 2016/17 the net FOB was GHC9,812.71, so percentage paid to the farmer was 77.45 per cent,” the Ministry said.

It concluded that using this universal formula meant that famers during the NDC era were paid 65.22 per cent – in other words, below the minimum 70 per cent. “If we are to admit their inclusion of premium rate in the calculation at their ridiculous $350, it would mean the NDC was paying the farmer 57.12 per cent,” the ministry said.

“This why they instituted the sham Stabilisation Fund account, which was depleted by Stephen Opuni’s administration, before leaving office, including the balance on the $1.8 billion loan.

“Meanwhile, it is worthy to note by all Ghanaians that Ghana attracts an average of $120 to $140 on main cocoa beans, while the light crop to substandard beans are sold at a discount of between 20 per cent and 30 per cent.

“It is therefore misleading for the Minority to deceive us by adding premium rate factor to the pricing of the producer price, for all our beans are not attracting the premium.”

Of the 2017/18 crop season, the Ministry recalled that the world cocoa price sank as low as $2,080 at an exchange rate of GHC4.40 to the dollar while a tonne of cocoa sold for GHC9,152.

However, despite all this, the Akufo-Addo government kept faith with the farmer and maintained the 2016/17 price of GH₵475 per bag.

 
Better livelihoods

The Ministry of Agriculture further said the 2018/19 crop season has attracted a world market price of $2,200, which translates into GHC10,560 at the exchange rate of GHC4.80 to the dollar. As such, Ghanaian farmers get paid the same GHC7,600/mt or GHC475/bag ‒ the equivalent of 72 per cent of the FOB price.

“The NPP government maintained the cocoa price at GHC7,600/MT to show the government’s commitment in improving the welfare of the Ghanaian cocoa farmer,” the Ministry said.

Anticipating volatility in the world market price and mindful of the plight of the farmer, COCOBOD put in place productivity improvement schemes which include spraying, fertilisation, subsidy and hand pollination, all aimed at improving the current 450kg/ha to minimum of 1,500kg/ha.

“Currently, some farms are recording 36 bags or 2.25mt/ha and this is what farmers should and must be educated and encouraged to focus on to improve their livelihood,” the ministry said.

The Ministry of Food and Agriculture has explained that the New Patriotic Party government maintained the price of cocoa at GHC7,600 per metric tonne to show its commitment to improving the welfare of the Ghanaian cocoa farmer.

At a press conference yesterday on the producer price for the 2018/19 crop year, the ministry explained that it was important to dispel the current misinformation being peddled by the Minority NDC in Parliament.

“We in the ministry recognise the importance and critical role the food, agriculture and cocoa affairs select committee of Parliament plays in the activities of the industry. However, we are shocked by the partisan nature of Minority members of the committee and their handling of such a critical national issue,” the statement read.

 
Unanimous consent

According to the Ministry, barely two months ago it was in Parliament to discuss with the select committee the challenges facing the cocoa sector and also to seek its approval for a syndicated loan of US$1.3 billion for purchases of cocoa in the 2018/19 crop season.

It said that at this meeting the committee gave its unanimous consent for procurement of the syndicated loan.

Expanding on how the producer price is determined, the ministry said the general principle underlying determination of the producer price is to pay the farmer a minimum price of 70 per cent of the net FOB achieved on the world market.

“Therefore, we don’t have any NPP or NDC formula, but rather a universal formula which we wish to explain to the whole country in the course of our delivery,” a representative of the ministry said.

With regard to the 2016/17 cocoa season, the ministry recalled that when the NDC was in power, the world market price averaged $2,950. Using the then prevailing exchange rate of GHC3.95 to the dollar, that was the equivalent of GHC11,652.50. At the same exchange rate of GHC3.95, the total FOB value would be GHC9.9bn.

Keeping the faith

“[Afterwards] the industry cost is then deducted before arriving at the net FOB, 70 per cent of which should be the least farmer price. In 2016/17 the net FOB was GHC9,812.71, so percentage paid to the farmer was 77.45 per cent,” the Ministry said.

It concluded that using this universal formula meant that famers during the NDC era were paid 65.22 per cent – in other words, below the minimum 70 per cent. “If we are to admit their inclusion of premium rate in the calculation at their ridiculous $350, it would mean the NDC was paying the farmer 57.12 per cent,” the ministry said.

“This why they instituted the sham Stabilisation Fund account, which was depleted by Stephen Opuni’s administration, before leaving office, including the balance on the $1.8 billion loan.

“Meanwhile, it is worthy to note by all Ghanaians that Ghana attracts an average of $120 to $140 on main cocoa beans, while the light crop to substandard beans are sold at a discount of between 20 per cent and 30 per cent.

“It is therefore misleading for the Minority to deceive us by adding premium rate factor to the pricing of the producer price, for all our beans are not attracting the premium.”

Of the 2017/18 crop season, the Ministry recalled that the world cocoa price sank as low as $2,080 at an exchange rate of GHC4.40 to the dollar while a tonne of cocoa sold for GHC9,152.

However, despite all this, the Akufo-Addo government kept faith with the farmer and maintained the 2016/17 price of GH₵475 per bag.

 
Better livelihoods

The Ministry of Agriculture further said the 2018/19 crop season has attracted a world market price of $2,200, which translates into GHC10,560 at the exchange rate of GHC4.80 to the dollar. As such, Ghanaian farmers get paid the same GHC7,600/mt or GHC475/bag ‒ the equivalent of 72 per cent of the FOB price.

“The NPP government maintained the cocoa price at GHC7,600/MT to show the government’s commitment in improving the welfare of the Ghanaian cocoa farmer,” the Ministry said.

Anticipating volatility in the world market price and mindful of the plight of the farmer, COCOBOD put in place productivity improvement schemes which include spraying, fertilisation, subsidy and hand pollination, all aimed at improving the current 450kg/ha to minimum of 1,500kg/ha.

“Currently, some farms are recording 36 bags or 2.25mt/ha and this is what farmers should and must be educated and encouraged to focus on to improve their livelihood,” the ministry said.