Ghana needs to urgently review producer price of cocoa

The Ghana Cocoa Board (COCOBOD) should as a matter of urgency review the producer price of cocoa to prevent smuggle activities along the borders, says the Managing Director of Kuapa Kokoo Limited, a licensed buying company.

According to Mr. Emmanuel Kwabena Arthur, raising the margin will discourage farmers from seeking higher prices from neighbouring countries, especially Cote d’Ivoire.

The margin has remained unchanged over the past four years – the producer price of cocoa in Ghana is presently pegged at Gh₵3,392 per tonne.

Mr. Arthur expects the COCOBOD to review the margin paid LBCs to reflect the current economic conditions in the country and reduce the negative impact of smuggling on operations of LBCs.

“We advance money to our purchasing clerks to deliver the cocoa to us; so we pre-finance the supply of cocoa. Now we have taken loans from the banks which attract interest; it is the cocoa that is delivered that gives you the margin to be able to pay back the loan and the interest. So if you give out the money and you can’t get the cocoa to buy, then you can’t deliver to get the margin to be able to pay your interest,” he told LuvBiz at the 20^th Annual Delegates Conference of Kuapa Kokoo Farmers Union in Kumasi.

 

Mr. Arthur observed the high incentive of smuggling cocoa out of Ghana, coupled with poor road infrastructure to take delivery of cocoa, could lead to the collapse of local LBCs.

Kuapa Kokoo Limited purchased 48,246 metric tonnes of cocoa in the 2012/2013 crop season - capturing about 5.7percent of the market share.

The company recorded a turnover of Gh₵183.8million and a profit before finance cost of Gh₵6.8million.

However, the profits that would have gone to improve on the livelihoods of the farmers were absorbed under finance cost, leaving only Gh₵203,561 as net profit.

Mr. Arthur is worried the situation will persist this year, as the banks are quoting between 27% and 30% interest rates.

“Something should be done about this so that the farmers can realize the full benefits of their toils,” he stated.

Other operational challenges include inadequate Seed Fund for the purchase of cocoa from the Ghana Cocoa Board and congestion at the takeover centres, leading to defects on the cocoa.

A group of cocoa farmers in the Western Region recently threatened to demonstrate against government policies, which they say are collapsing the cocoa sector.

Story by Kofi Adu Domfeh