According to COCOBOD CEO Joseph Boahen Aidoo, the current lack of supply of cocoa in Ghana and Cote d’Ivoire for the worldwide market and the low prices that result are raising concerns about purposeful efforts by international traders to keep the price of the commodity at its lowest.
He added: “As we speak, there is a tremendous shortfall of the product in both nations for supply; yet nonetheless, prices are down.” He claimed the COVID-19 pandemic caused a natural surplus of cocoa in Ghana and Ivory Coast for 2021, which kept prices lower. Prices decrease when there is a surplus, and they stay low when there is a deficit.
“These events are puzzling, and we need to investigate them. The fact that there are purposeful attempts and plans by international actors to keep prices down is also revealed by this, according to Mr Boahen Aidoo.
At a meeting sponsored by the Cote d’Ivoire-Ghana Cocoa Initiative in Accra to discuss sustainable solutions for a more thriving cocoa industry with a focus on Living Income Differential (LID) and country premiums, the CEO was speaking to senior cocoa value chain actors, multinational companies in cocoa trade, and key stakeholders.
The farmer, who is at the centre of production, needs to be more prominently featured, he said, therefore we must search for a more thriving and sustainable industry.
The industry has been worried about the welfare of farmers for the past 20 years, and as a result, several initiatives, such as certification and sustainability programs, have been created with the goal of bettering the situation of farmers.
Less than 20% of farmers in Ghana participated in these sustainability programs, hence these programs were insufficient because they only reached a portion of farmers.
COCOBOD created the LID four years ago to boost farmer incomes and assist them in achieving a living income of $400 per tonne over the floor price in an effort to cushion cocoa producers further.
However, Mr Boahen asserts that the LID effort is now having only little effect and refers to it as a mirage.
The cost of cocoa, which was approximately US$3,000 per tonne in 2016, is now closer to US$2,000 per tonne, making it less attractive for farmers to remain at the forefront of supply and production.
Due to these events, COCOBOD started subsidising the production of cocoa in 2019 for about US$200 million. As of 2021, the sum would increase to US$400 million per year, helping Ghanaian producers keep on track.
Despite the fact that the industry has throughout the years paid a premium for high-quality cocoa production, Mr Boahen Aidoo revealed that this premium is currently being undervalued, which is leading to a depressing situation.
“Once the premium is discounted, it follows that when the farmer delivers cocoa to the regulator, all quality must be taken out of the picture. But this is false, he insisted.
According to COCOBOD, current cocoa premiums for the origin occasionally range between -50 and -120.
According to Mr Boahen, once the origin is taken into account, it is difficult for Ghana and Cote d’Ivoire to earn enough money to compensate farmers, which “makes the whole premise of LID an illusion, since premiums collapse and farmers face the effects of a price decrease.”
In addition, Ghanaian cocoa growers have been dealing with other difficulties that the regulator worries may cause them to stop producing the commodity.
Issues like cocoa farmers selling land for unauthorized mining operations continue to exist. Others include competition with cashew production and rubber manufacturing, the latter of which, according to COCOBOD, is extremely dominant and thriving.
Due of the intense rivalry, a farmer who lacks the incentive of proper compensation will be compelled to cede his or her land to the aforementioned uses. The entire chain collapses if the farmer is compromised, according to the COCOBOD chief.
Alex Arnaud Assanvo, executive secretary of the Cote d’Ivoire-Ghana Cocoa Initiative, emphasized the need of placing farmers first in all value chain conversations.
He pledged the commitment of Ghana and Cote d’Ivoire to guarantee that the quality of cocoa beans is a requirement for the international market.
At the conference, Patrick De Boussac, CEO of the multinational cocoa trader Touton, stated that value chain participants want to see the business flourish.