The International Monetary Fund (IMF) has advised the government to adjust the producer price of cocoa to reflect changes in international cocoa prices.
According to the IMF, the downward adjustment had become necessary because the Ghana Cocoa Board (COCOBOD) was grappling with a funding gap of GHS1billion due to the government’s inability to reduce producer prices paid to cocoa farmers at a time global prices of the crop had been falling.
The fund said although the government and COCOBOD were taking appropriate measures to provide some temporary relief, “more is needed to strengthen COCOBOD’s financial position.”
Before the commencement of a cocoa season, mostly in October every year, COCOBOD normally announces a farmgate price – the producer price – that it will pay to farmers for their beans in the crop season.
That price was last increased by 11.76% in October 2016 to cover the 2016/2017 season.
Since then, it has remained unchanged at GHS7,600 per tonne, translating into GHS5475 per bag of 64 kilogramme (kg) gross weight.
The price of cocoa remained bearish throughout 2017, rising only in October before falling again to end December at $1,917.68 per tonne, according to the world cocoa body.
In 2018, ICCO’s data showed that prices strengthened consistently to peak at $2,659.9 per tonne in May before fluctuating throughout the remaing part of the year.
Thus, maintaining the price at GHS7,600 per tonne at a time the global cocoa price was crashing means that COCOBOD has been accumulating losses, a development the IMF now estimates at GHS1 billion.