Source: AFP
Ghanaian cocoa farmer Isaac Antwi says he has to smuggle his beans into Ivory Coast to sell them at a decent profit, even though international prices for the commodity have risen recently.
He is not the only farmer to turn to the illegal trade in the world’s number two cocoa producer, as the country’s currency, the cedi, has plummeted and production costs have soared.
“With the cedi losing value every day, sales in Ghana just don’t cut it,” said Antwi, who lives in Suhum, in the Eastern Region, 74 kilometers (46 miles) from the capital, Accra.
“Prices are better across the border and the stronger currency means I can feed my family and pay off my debts.”
Ghana is emerging from one of its worst economic crises in years after securing a $3 billion loan from the International Monetary Fund and restructuring most of its debt.
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But the devaluation of the cedi, which has lost more than 20% of its value against the dollar this year, has severely affected the profitability of the cocoa crop, even as international prices topped $10,000 a tonne in March before retreating recently months.
Production costs have soared, with fertilizers and other inputs needed for farming becoming increasingly expensive.
Poor road networks have also inflated transport costs, further squeezing farmers’ profit margins.
Cocoa producers are required to sell their produce to the Ghana Cocoa Board of State, or COCOBOD, which sets prices to help protect farmers from market volatility.
In April, the government raised the cocoa price paid to farmers to $2,188 (CEDI 33,120) per ton, a 58.26 percent increase.
But this was not enough to offset rising costs and the lure of higher prices in Ivory Coast and Togo.
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“If the government would raise the price of cocoa to match our neighbours, smuggling will stop,” said another Suhum farmer, Serwaa Adjei. “We have to survive.”
Small farmers
Ghana’s cocoa sector, which accounts for about 10 percent of the country’s GDP, is largely dependent on smallholder farmers.
These growers, however, have found themselves in an increasingly precarious situation.
Dennis Nyameke, a veteran farmer from the Western Region, explained the economics behind the smuggling.
“A bag of cocoa sells for at least $137 in Ghana, but when we smuggle it to Ivory Coast, we can get close to $152,” he said.
“With four children to care for, I can’t afford to ignore that difference.”
Despite efforts by the state COCOBOD to address these challenges, farmers say they are still struggling.
Source: AFP
Fiifi Boafo, head of public affairs at COCOBOD, acknowledged the impact of smuggling, illegal mining and adverse weather conditions on cocoa production.
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Illegal gold mining, known locally as Galamsey, is rampant in rural Ghana, affecting water supplies and keeping farmers off the land.
“Illegal mining activities cut off farmers from their farms and pollute the water bodies needed to irrigate cocoa farms,” Boafo told AFP.
He said climate change had also affected cocoa yields.
“We are doing a lot to improve the situation of farmers. We are incentivizing cocoa farmers by paying them more for their production,” he said.
“But the financial pressures are enormous and we are fighting a tough battle.”
Obed Owusu-Addai, an activist at EcoCare Ghana, a community rights group, called for comprehensive reforms.
“The government must take urgent steps to stabilize the CEDI and support farmers with subsidies and better infrastructure,” he said.
“It’s not just about higher prices, it’s about creating a sustainable environment for our farmers to thrive.”
Revenues are falling
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The cocoa sector, which is also struggling with the outbreak of the Cocoa Swollen Stem Virus, has seen a significant decline in production and revenue in recent years.
Ghana has lost harvests from nearly 500,000 hectares of land in recent years, according to COCOBOD, or about 29 percent of Ghana’s total cocoa production area of 1.7 million hectares.
Ghana’s struggles have global implications.
Industry experts estimate that over 100,000 tonnes of cocoa beans have been smuggled into Ivory Coast from Ghana since last year.
Smuggling, combined with other challenges, has led to a $500 million drop in cocoa revenue in the first quarter of 2024, according to recent data released by the Bank of Ghana.
Boafo said Ghana’s cocoa production is forecast to reach 800,000 tonnes by the end of the year, reversing significant losses in recent years.
With over a million people dependent on the cocoa industry in Ghana, the stakes are high.
“We’re very optimistic,” Boafo said.
Source: AFP