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The Ghana Cocoa Council (COCOBOD) has announced that it will maintain the cocoa production price despite suggestions from the International Monetary Fund (IMF) to revise it downward.
The IMF wants COCOBOD to lower cocoa producer prices to reflect changes in international cocoa prices.
According to the IMF, the downward adjustment will help COCOBOD to fill its current funding gap of one billion GHS.
In its seventh and eighth reviews of the recently concluded External Credit Facility (ECF) program, the IMF explained that this gap was due to the Government's inability to reduce producer prices paid to cocoa a time when world harvest prices were falling.
However, COCOBOD's Director General's Office, Fiifi Boafo, told GBC that prices would be maintained to deter farmers from giving up their land for other activities.
Cocoa price
Before the start of the cocoa season, usually in October of each year, COCOBOD normally announces a producer price – the producer price – that it will pay farmers for their beans during the crop year.
The latter price was increased by 11.76% in October 2016 to cover the 2016/2017 season. Since then, it has remained unchanged at $ 7,600 billion per tonne, which corresponds to $ 475 billion per 64 kilogram (kg) bag of gross weight.
However, over the same period, the price of cocoa in the international market has dropped dramatically, from an average value of USD 2,500 per tonne in November 2016 to USD 2,287 per tonne, according to the report. 39; International Cocoa Organization (ICCO). ).
The price of cocoa remained bearish throughout 2017, rising only in October before falling back to the end of December at $ 1,917.68 per tonne, according to the World Cocoa Organization.
In 2018, ICCO data showed that prices were steadily strengthening to reach a high of USD 2 659.9 per tonne in May, before fluctuating during the rest of the year.
The Bloomberg terminal, which also tracks world harvest prices, estimated it at $ 2,245 per tonne on the morning of April 25.
Explicit support
Thus, keeping the price at 7.600 GH ¢ per tonne at a time when the world price of cocoa collapsed means that COCOBOD has accumulated losses, which the IMF currently estimates at 1 billion GH ¢.
In August 2018, Finance Minister Ken Ofori-Atta said, "If we get high prices for our cocoa in the international market, our farm price should be high.
"If we get less, we should pay less. The government must be firm on this point so as not to create a debt deficit, "he said in an interview with the media.
Nevertheless, the producer price was maintained at 7,500 GH ¢ in October of the same year.
The IMF said in its documents that the government has always upheld the price to support "farmers' incomes – a key government priority to prevent the loss of farmland to illegal mining."
However, he explained that this type of support could take the form of "explicit fiscal transfers".
He noted that the government and COCOBOD "are pursuing a series of cost-cutting measures to reduce the gap.
"In the opinion of the staff, although these measures may provide temporary relief, more is needed to strengthen the financial situation of COCOBOD," he said.
Debt of the BoG
On March 19, COCOBOD raised $ 300 million – the equivalent of 1.6 billion GH ¢ at the time (1 USD to 5.2 GH ¢) – from a consortium of international banks to repay "cocoa bills raised by the Bank of Ghana on behalf of COCOBOD". a statement from the council said at the time.
The funds were also to be used to fund programs to improve production, he said.
Mr. Boahen Aidoo, President and CEO of COCOBOD, said at the time that a loan would greatly contribute to the realization of COCOBOD's sustainable development programs in all cocoa growing areas in order to improve social and environmental sustainability of cocoa farming and farmers' livelihoods. . "
— Myjoyonline
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