Ghana’s Cocoa Price Controversy: An Insightful Look into Ghana’s Cocoa Industry
Joseph Boahen Aidoo, the CEO of the Ghana Cocoa Board (COCOBOD), has responded to claims made by former president John Dramani Mahama concerning the government’s compensation strategy for cocoa farmers. Mahama had criticized the recent increase in the producer price of cocoa, asserting that it was a ploy to exploit the farmers. He claimed that the government’s price of GHC1,308 per bag was only 52.7% of the Free on Board (FOB) price on the international market, in contrast to the 66.06% his administration offered in 2016.
The current president, Nana Addo Dankwa Akufo-Addo, had announced a 63.6% rise in the producer price from GHC12,800 per metric tonne to GHC20,943 per metric tonne. This implies that for the 2023/24 season, farmers would receive GHC1,308.99 for every 64-kilogram bag of beans sold to licensed buying companies.
The COCOBOD’s Rebuff: Farmgate Price and International Market Dynamics
In response to Mahama’s criticisms, Aidoo explained that the majority of Ghana’s cocoa for the 2023/24 season was sold forward between October 2022 and March 2023 when the international prices fluctuated between $2,200 and $2,400 per tonne. The international price only started to rise in April 2023 after most of the crop had already been sold. Hence, Aidoo’s argument suggests that Mahama’s calculations based on the current international price of $3,600 per tonne are flawed as they do not consider the forward-selling strategy employed by the COCOBOD.
The Chief Executive Officer of COCOBOD emphasized that it is incorrect for the former president to use the current international market price of cocoa as the basis for calculating the producer price for the commodity. Aidoo’s argument throws light on the dynamics of the international market, including the forward-selling strategy of the cocoa beans, which is instrumental in understanding the pricing mechanism.
Understanding COCOBOD’s Operations: A Complex Scenario
The COCOBOD’s operations and strategies are crucial to understanding the scenario. Aidoo’s open letter to the flagbearer of the opposition NDC hinted at the complex dynamics involved in selling Ghana’s cocoa beans. He explained that most of the 2023/24 crop was sold between October 2022 and March 2023 when the international prices were considerably lower than the current price.
The ongoing dispute between the former and current administration regarding the pricing of cocoa in Ghana is a multifaceted issue. The controversy reveals the complexities of the cocoa industry, including international market dynamics and forward-selling strategies. Amidst the controversy, the role of COCOBOD in preserving the interests of the farmers while navigating the fluctuating international market prices is crucial. The debate underscores the need for comprehensive understanding and transparent dialogue to ensure the welfare of Ghana’s cocoa farmers.
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