Minority in Parliament describes new producer price of cocoa too low

The Minority NPP caucus of Parliament says the producer price of Cocoa should have been six hundred Ghana Cedis per a bag of 64 kilograms instead of the four hundred and 75 Ghana Cedis that government came out with earlier this month. 

In a press release, he said a check on the extensive smuggling of chemical inputs and the elimination of inflated contracts for cocoa roads, would free much needed resources to pay better prices to farmers.
 
This was contained in a statement signed by its leader, Osei Kyei-mensah-Bonsu. 

It said an increase of 50 Ghana Cedis over the last crop season's price is not enough to cushion farmers. 

It said compared to the current rate of inflation of some 17 percent, the cocoa farmer is worse off with the new price. 

It said comparing the increase of 11 point 76 percent in Ghana to the 10 percent increase awarded to cocoa farmers in Cote D’Ivoire as laudable is wrong.
 
It says Inflation in Cote D’Ivoire is less than five percent making the cocoa farmer there far better off. Again, the lending rate in Ghana is about 35 percent.
 
Thus If a farmer took a loan to start up a venture in cocoa production or expand his farm, he would be in serious trouble after the 11.76 percent increase adding that lending rates in Cote D’Ivoire are below 5 percent. 

The statement went on further to say that the Ghana Cedi has depreciated by more than 14 percent this year and if one factored this into the equation the Ghanaian cocoa farmer is rendered much poorer.

It noted that the Minority Caucus in Parliament in August, 2014 recommended that the new producer price for the crop year 2014/2015 should be fixed at four hundred and 79 Ghana Cedis per bag due to the substantial decline in real producer prices and incomes of cocoa farmers over the period 2011/2012 – 2014/2015. 

The NPP thus say the four hundred and 75 Ghana Cedis just announced is two years too late.


Below Is The Full Statement:

NPP PRESS STATEMENT BY THE MINORITY CAUCUS IN PARLIAMENT
OCTOBER, 2016
 
THE NEW COCOA PRODUCER PRICE FOR CROP YEAR 2016/2017
 
On 1st October, 2016 the government announced a new price for producers of cocoa. The new price for the 2016/2017 season is GHS475 per bag of 64kg. This compares with the 2015/2016 price of GHS425 – an increase of GHS50 or 11.76 percent.

Compared to the current rate of inflation of some 17 percent, the cocoa farmer is worse off with the new price which has been announced. Those who are comparing the increase of 11.76 percent to the 10 percent increase awarded to cocoa farmers in Cote D’Ivoire are getting it all wrong. 

Inflation in Cote D’Ivoire is less than 5 percent. So the Ivorian cocoa farmer is far better off. Again, the lending rate in Ghana is about 35 percent. If a farmer took a loan to start up a venture in cocoa production or expand his farm, he would be in serious trouble after this 11.76 percent increase. Lending rates in Cote D’Ivoire are below 5 percent. 

The Ghana Cedi has depreciated by more than 14 percent this year and if one factored this into the equation the Ghanaian cocoa farmer is rendered much much poorer.

It is important to emphasize that the cocoa producer price was kept unchanged throughout crop years 2011/2012 to 2013/2014. 

In this period the world price of cocoa was rising, inflation was going up and the Cedi was fast depreciating. 

These economic indicators should have allowed the NDC government to increase the producer price of cocoa much more significantly than they have done. Characteristically, the Government refused to do so. 

To add insult to injury, the government refused to pay the bonuses due to the farmers worth over GHS100 million Cedis.

Because of the substantial decline in the real producer prices and incomes of cocoa farmers over the period 2011/2012 – 2014/2015, the Minority Caucus in Parliament in August, 2014 recommended that the new producer price for crop year 2014/2015 should be fixed at GHS479 per bag. 

Contrary to this proposal, the NDC government chose to fix the producer price at GHS345 per bag for the 2014/2015 season. 

This was followed by a 5.8 percent increase in the producer price to GH425 per bag in the 2015/2016 season.

Ladies and gentlemen, with the rather very low producer prices awarded to cocoa farmers from 2011/2012 to 2015/2016, one would have expected that the NDC government would have made amends and taken advantage of the colossal savings they made in those years to correct the injustice meted out to cocoa farmers, to forestall their sinking fortunes. 

Alas, that was not part of the consideration of this insensitive government.

The new price of GHS475 per bag announced last Saturday will ensure that the poverty level of cocoa farmers will increase to new highs and the little incentive left in cocoa farming will be buried.

The plight of cocoa farmers is made even more pathetic because of the shortages most of them are experiencing in the supply of chemical inputs.
  
The Ghana COCOBOD claims it spent the equivalent of over GHS838 million in 2015/2016 importing and distributing fertilizers, pesticides, fungicides and other chemicals to cocoa farmers; and another US$150 million on cocoa roads, among others. 

The figure of GHS838 million is nearly the total Budget Allocation to both the Ministry of Food and Agriculture and the Ministry of Fisheries and Aquaculture Development in financial year 2016.

In spite of such huge expenditures, many cocoa farmers from Sefwi, Ahafo, Volta and other producing areas complain of inadequate supply of chemicals. This is not surprising, since reports persist of massive smuggling of cocoa chemicals across our borders to other West African countries including Togo, Burkina Faso, Cote D’Ivoire, Cameroun, Nigeria, Benin and Niger. 

The “free inputs” policy of the NDC government is obviously fuelling the smuggling of these chemicals.

The massive leakage of imported chemical inputs by smuggling to neighbouring countries, does not only deny our cocoa farmers of much needed inputs and thereby reduce yields and production, but also cuts the amount available to pay remunerative prices to cocoa farmers. 

This is because the producer price is determined after deductions from gross F.O.B proceeds for chemicals, cocoa roads and other such expenditures. 

A Check on the extensive smuggling of chemical inputs and the elimination of inflated contracts for cocoa roads, would free much needed resources to pay better remunerative producer price of GHS600 per bag instead of the lowly amount of GHS475 that COCOBOD has now proposed. 

This price of GHS475 is two years too late.

Thank You. 


GBC