Farmers surrender cocoa farms for galamsey

Uncompetitive cocoa prices on the international market is forcing cocoa farmers in gold-producing areas to sell farmlands for illegal mining activities, the Ghana Civil-society Cocoa Platform (GCCP) has said.

The situation is rather disturbing, given cocoa has been the main cash crop that has been the backbone of the economy. Currently, Ghana is the second-largest producer of cocoa after Cote d’Ivoire.

GCCP says the uncompetitive cocoa prices on the international market are reflecting in the pockets of ordinary cocoa farmers in Ghana. As a result of this, cocoa farmers and landowners are giving away their lands to miners for money.

“They do not feel that their efforts and toil are being properly and fairly compensated, hence they cash-in and move out of the cocoa space,” the group stated.

The emerging development, the group said, remains a threat to long-term survivability of the cocoa industry.

Given this, the civil society group asserted that increasing the farm gate-price to levels that are commensurate with the work farmers put into producing cocoa beans is the surest solution to making the cocoa industry competitive.

In a statement issued by the independent campaign and advocacy platform for civil society actors in the cocoa sector, they argued that based on the working assumption of the Producer Price Review Committee (PPRC) of COCOBOD, cocoa farmers should receive a minimum of GH₵838 (US$98) per bag (62.5kg) of cocoa beans.

This figure was arrived at using the lowest projected values available including a LID of US$400 per tonne as agreed, according to the GCCP.

“As we always do, we have also looked at the numbers; and based on our very modest and somewhat conservative estimates, have arrived at a minimum 15-20 percent increment in the farm-gate price of cocoa for this season,” the statement captured.

Furthermore, they said this expectation was reached while taking note of all the challenges posed by the unstable Ghanaian cedi, threats posed by mining and the need for farmers to be paid adequate and commensurate prices for their efforts.

The current International Cocoa Organisation (ICCO) world cocoa market price – which averages Europe, New York and London futures stands at US$2,248 per tonne of cocoa beans.

“We also acknowledge the fact that Ghana is ‘forced’ to sell cocoa on the terminal market at a discounted price. Again, there has been a drastic drop in the origin differential/country premium – from over US$400 to a current US$65.

“In effect, the expectation is that the net country cocoa selling price (producer price) will be not less than US$2,103. Based on the 2020/2021 parameters for calculating the net FoB for cocoa beans, GCCP observed that the net FoB for the 2022/2023 cocoa season to be not less than 80 percent of the prevailing producer price, which should be around US$1,682.

“By applying the PPRC working assumption of a minimum of 70 percent of net FoB going to farmers, this translates into US$1,178 per tonne for the farmer. This figure is less than the US$400 LID that was instituted and charged by COCOBOD on all futures for the 2020/2021 cocoa season.

“Assuming COCOBOD gives all the US$400 LID to the farmers, it brings the farm-gate price to US$1,578 per tonne for the 2022/2023 cocoa season. Using the year-on-year Bank of Ghana (BoG) exchange rate of US$1 to GH₵8.5, cocoa farmers are expected to receive not less than GH₵13,413 per tonne of cocoa beans – which should translate into a minimum GH₵838 per bag of cocoa beans.”

It further reiterated that these estimations are based on the minimum projected figures, and the assumption that farmers will receive a minimum 100 percent of LID.