In the Afigya Kwabre district of Ghana’s Ashanti region, people like Kingsley Owusu are known to grow some of the country’s most important cash crops.Owusu and his community are growing cacao beans Over 30 years.
For many years, thanks to the cocoa harvest, he was able to take care of his children, who grew into adults. But now, at 60, Owusu worries about his livelihood.
“The decline in production levels was due to climate change And sick. And illegal mining activities also contribute to this,” Owusu told DW, adding that he barely earns enough to survive.
Owusu used to produce about 10 bags of cocoa per season, but now he struggles to fill even three bags. As a result, he has much less cash on hand than before.
Ghana intervenes to support cocoa farmers
The Ghana Cocoa Board (COCOBOD), which regulates the sector, recently announced a significant increase in the per-tonne payout to cocoa farmers.
“Increasing the income of cocoa farmers has made it necessary to increase the cocoa producer price,” COCOBOD said in a statement.
It has promised to increase the tax rate by nearly 60% from the previous rate of 20,928 Ghanaian cedis (€1,460/$1,557) per tonne, meaning farmers will now pay 33,120 cedis per tonne. This equates to 2,070 cedis per bag of cocoa with a total weight of 64 kilograms.
However, farmers like Owusu are objecting to the government’s new pricing policy.
Ghanaian cocoa farmers feel excluded from decision-making
“Based on world prices, we should receive more goods,” he told DW, highlighting that cocoa prices on the world market reached $10,000 per tonne this month.
The price of cacao is mainly determined by: merchandise The New York and London futures markets are primarily driven by supply and demand.
However, the way cocoa beans are sold is based on different standards in different countries, and the structure of cocoa trading systems across Africa often varies widely.
in Ivory CoastFor example, farmers who are among the continent’s leading producers can sell their beans to their cooperatives or deal directly with private purchasing companies.
but, ghanaThe world’s second-largest cocoa exporter has long-established mechanisms that restrict farmers in a variety of ways. They cannot control their own pricing because they cannot deal with external buyers.
They can only sell their beans to the national agency COCOBOD, which trades its products on the world market.
Moses Jean Asiedu, director of the West African Cocoa Farmers Organization, echoes the concerns expressed by local Ghanaian farmers. “COCOBOD is a price maker and prices are established [is] beyond [the control of] Farmer. And we believe that the facilities that are setting the prices are not fair,” he told DW.
Objectives of the Ghana Intensive Cocoa Market
Meanwhile, COCOBOD spokesperson Fifi Boafo told DW that rising cocoa prices on the global market will not immediately impact farmers’ pocketbooks.
“Price increase [changes] Selling in international markets is exciting for us. We are excited because this provides an opportunity for farmers to increase their income,” he explained, adding that they are doing “forward sales” with farmers.
However, Ghana’s policy of deferring the selling price of cocoa means that producers do not have an independent say on the issue and are dependent on prices agreed to by the government.
COCOBOD says the policy aims to give both the government and cocoa farmers collective control over the demand and supply mechanisms in the commodity market, ensuring future cocoa supplies and addressing price volatility risks. The aim is to stabilize the market while .
But Asiedu said the deal left cocoa-producing countries like Ghana unable to ensure fair prices for everyone, and this must change. “It’s not fair. That’s why COCOBOD agrees.” [accept] “Whatever you give me,” he said.
Asiedu said local farmers in Ghana were entitled to more than a fraction of the selling price of their beans and accused the government of interfering with the production process, leading to a shortage of producers.
“Only the government [looks at] “We need to see how much it costs to process the cocoa before we offer prices to farmers,” he told DW.
Mr Boafo agreed that the pre-sale policy for Ghanaian cocoa may not be giving farmers the opportunity to maximize the benefits of their production, especially at a time when prices are soaring. world market.
But he believes Ghana’s policies have advantages as well, and have protected farmers in the past by establishing reliable tax rates on crops.
Are farmers facing an untamable market?
Asiedu of the West African Cocoa Farmers Organization said Ghana may be running out of time to save its cocoa sector. Many farmers are abandoning their businesses or retiring without a successor.
“Most farmers, about 70 percent, are elderly. And they don’t have the strength to maintain their farms, especially if they don’t get enough money for their labor. So they abandon their farms,” Asiedu said. he explained.
To halt this trend, both Ivory Coast and Ghana took extraordinary steps in 2019 to improve living conditions for farmers. They declared that to compensate for the changing and aging cocoa labor market and the so-called living income gap, cocoa buyers must pay an additional premium of $400 for every ton of cocoa beans they buy.
But new research presented at the World Cocoa Conference by humanitarian organization Oxfam shows that this approach has failed, due in part to soaring commodity prices.
But this policy has broken down, in part, because traders pay a negotiated premium for cocoa based on qualities such as taste, fat content, and bean size, or so-called “country disparities.” did.
“At least if [the price on the global market] We have reached a certain level where farmers can continue producing comfortably enough and buyers can afford it. [cocoa]”But in this situation, where the market is not working in the interests of cocoa farmers, the sustainability of the industry becomes difficult,” Boafo told DW.
Oxfam’s research reveals that cocoa buyers have simply reduced the disparity of cocoa between countries. Ivory Coast and Ghana After these countries introduced a $400 premium to support farmers.
Don’t you need any more chocolate?
Meanwhile, another major crisis is already brewing on the cocoa horizon of these two major producing countries, with production levels having fallen significantly in recent years.
Ghana produced about 750,000 tonnes of cocoa beans in the 2021-2022 harvest season, but production has declined sharply since then. Ghana’s cocoa production for the 2023-2024 season is currently expected to decline by almost 40%.
Mr Boafo said the shortage was the reason why bean prices had recently exceeded $10,000 per tonne on the global market.
Asiedu explained that in addition to the lack of fair prices for cocoa beans, the sector also faces serious threats from climate change and other factors.
“Right now we have unusual amounts of rainfall, unusual amounts of sunshine that are sometimes unpredictable, and we also have quite a few extreme weather events. [other] There are also issues such as diseases that farmers have to manage,” he told DW. [diseases] is also a problem. ”
Mr Boafo added that there is a need to adopt smart farming practices to protect the sector and combat global warming. “Climate change is a big concern,” he said. It is important to be able to deal with its effects. ”
But whether the issue is climate change, commodity prices, pests, production volumes, or incentives to continue the cocoa trade, countries that produce the precious beans appear to have little power to influence price outcomes. is.
That power appears to rest almost exclusively with chocolate buyers and their intermediaries.
Editor: Sartan Sanderson