The Head of Public Relations at COCOBOD, Fifi Boafo, has said that the debate raised by the National Democratic Congress (NDC) and its minority group in parliament over the recent increase in cocoa prices is as a result of a lack of understanding of the pricing system.

This comes after Minority Leader Dr Cassiel Ato Forson explained that farmers should have gotten at least ¢2,500 cedis per cocoa bag given the high price on the international market.

According to the Ajumako Enyan Essiam MP, the price of the commodity has seen the biggest rise since 1977, and thus the government is ripping cocoa farmers off. 

But, speaking on PM Express on Joy News, Mr Boafo said the NDC's calculations of how farmers should be paid are flawed.

“The exchange rate used is actually 11.5 and it was provided by the Bank of Ghana. Bear in mind, it is not a one-off thing where the season is open today and all transactions are done today and for that reason, you have to use the exchange rate for the day.”

“So, the exchange rate that was used was actually 11.5 and if you use 11 .5 you get the actual figure that was quoted. So you do not have to border yourself with all the mathematics and all the semantics that was done with it,” Mr Boafo said.

He added that COCOBOD also does forward sales where the majority of crops are sold prior to the start of the season to help do an accurate forecast going into the cocoa season.

“When COCOBOD is starting the season, it gives a price that will be used for the purchase of cocoa the entire season. If you go to other countries, they will do the main crop season. The price will be different from the light crop season. In our case, it does not happen like that. What actually happened is that, beginning of the season, we know how much money is coming in and that is the basis of determining the price that is paid to the cocoa farmer. How do we know that? We know that because by the time you start the season, you have done about 80% of your crop already sold.”

“You know how much you are making going into the cocoa season and for which reason you are able to say that it is fair to give the farmer GHS1,308. If someone tells you today that you should use a figure of today to determine the price, obviously the person is unaware or has been briefed wrongly so the person does not know that by the time you start the season, the majority of your crop is already sold.”

“But, they do not take into consideration the fact that the cocoa was sold from last year, October to date. They actually use a figure from August to form the basis of this discussion and then come to the conclusion without taking into consideration the fact that there's part of it that is freight, there's part of it that is for shipment and they lump it together for their analysis.”

Mr Boafo added that another thing that affects the price is the sizes of the bags explaining that if the size is not up to what is required for the market price, it is discounted adding “the discount is actually between 20 to 40 percent.”

Background

President Akufo-Addo announced a more than 60 percent hike in cocoa prices for this year’s cocoa season, translating to GH¢1,308 per cocoa bag. 

Speaking at an event in Tepa on September 9, President Akufo-Addo acknowledged the challenges faced by cocoa farmers due to low international cocoa prices, exacerbated by the COVID-19 pandemic.

Despite these difficulties, he said that COCOBOD and the government have decided to raise the producer price of cocoa.

The President explained that cocoa prices had increased from GH¢7,600 per tonne in 2016 to GH¢12,800 per tonne in 2022, a substantial 68% increase.

He added that the government had further raised cocoa prices from GH¢12,800 per tonne to GH¢20,943 per tonne, equivalent to GH¢1,308 per bag for the new season, explaining also that this new price illustrates 70.5% of the Gross FoB price and is equal to $1,821 per tonne.

President Akufo-Addo also indicated that this is the highest price paid to cocoa farmers in West Africa in approximately 50 years.

But former president John Mahama argued that given the international market price of cocoa reaching a 46-year record high of $3,600, the government should have provided cocoa farmers with a more equitable share of the international FOB price.

• Akufo-Addo announces GHS1,308 as price per bag of cocoa making it highest in West Africa

He expressed disappointment that the government has chosen to offer farmers a mere GH¢1,308 per bag, which constitutes only 52.7% of the FOB Price on the international market.