Maintaining the producer price of cocoa was prudent – Ken Ofori Atta

Ken Ofori-Atta, Minister of Finance

The Finance Minister, Mr. Ken Ofori Atta, has explained that government’s decision to maintain the producer price of cocoa for the 2017/18 crop season, at GH¢7,600 per tonne, was to minimise effects of the decline in price of the commodity on the world market, on cocoa farmers.

He said the drop in the international cocoa prices would have affected the earnings of cocoa farmers in the country, hence government’s resolve to retain the current producer price which represents 88.66 percent of the net Free On-Board (FOB) price of cocoa.

This he remarked that the development is a “clear demonstration of this Government’s commitment to enhancing the welfare of cocoa farmers.”

According to the Finance Minister, the average FOB price of cocoa in the past season witnessed a 30 percent decline from US$2,950 to US$2,080. This situation compelled other countries to reduce their producer prices of cocoa.

It would be recalled the Chief Executive of Cocobod, Mr. Boahen Aidoo, in a meeting with leaders of cocoa farmers, in Kumasi, said that the cocoa producer price for 2016/17, of GHS7,600 per tonne was pegged on the basis that the international price, which was averaged at $2,900. This was at a time the price volatility level was between $2,200 and $2,700.

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However, he indicated that the volatility levels had reached $2,100 and $1,800 compelling government to peg a ton of cocoa at $1,900. He said given that about a $1,000 had already been lost, and in view of other price variations, this could impact adversely on the industry in the coming years.

Regardless of this development, he said the government will have to decide on the next producer price of cocoa while he indicating that about GHS2 billion will be needed for cocoa purchases.

But presenting the 2018 budget to Parliament, Mr. Ofori Atta said the US$1.8 billion syndicated loan used in purchasing 969,000 metric tonnes of cocoa for the 2016/17 cocoa season has been repaid while US$1.3 billion has been raised to purchase a projected crop of 850,000 tonnes for the 2017/18 season.

He said, “Government will initiate an inducement package to take care of bottlenecks in the customary land tenure system.” But while the government remains committed to improving road infrastructure in cocoa growing areas, he stressed that there is a ‘value for money’ audit to ensure that the tax payers’ monies are used judiciously and efficiently.

“Cocobod, over the past three years, awarded cocoa road contracts to the tune of GH¢5.1 billion against a budget of GH¢1.6 billion, resulting in an excess budget of GH¢3.5 billion.”

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“As part of measures to promote industrialization, government modified the incentives to increase processing of cocoa in Ghana, through progressive discounts that incentivize tertiary processing. Thus, raising value addition to cocoa and creating jobs,” he added.

He also hinted that to ensure the long-term sustainability of coffee production, reforms in the marketing of coffee will be strengthened to assure farmers of a ready market and remunerative prices for the coffee produced.

The Shea unit of COCOBOD will remain pivotal in the implementation of these programmes. COCOBOD will, therefore, continue funding the Shea Unit as part of its operational activities to revamp the Shea industry, he said.

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