Cocoa Farmers Raise Red Flag

– Demand transparency, fair representation & solutions to persistent challenges in the sector

Story: Isaac AIDOO, Accra

THE National President of the Ghana Cooperative Cocoa Farmers Association, Mr. Issifu Issaka, has raised serious concerns about the lack of transparency, fair representation, and persistent financial challenges in Ghana’s cocoa industry.

Ghana’s cocoa industry, traditionally the mainstay of the country’s foreign exchange earnings, has been facing challenges in maximising its potential.

Despite a bold move less than a year ago by the Ghanaian government to increase the price per bag of cocoa beans by 63.5% to incentivise farmers and boost yields, the country’s inability to obtain funds from cocoa syndicated loans almost truncated this good news as authorities struggled to fund purchases.

Ghana’s Cocoa Board (COCOBOD), the state-owned entity overseeing cocoa production and export monopolies, has been grappling with significant financial setbacks, according to a recent report from the International Monetary Fund (IMF).

This situation has been attributed to various factors, including high rollover costs for outstanding cocoa bills, elevated purchase prices paid to cocoa producers compared to operational costs, and substantial quasi-fiscal activities such as providing fertilizers and developing rural roads, which have added strain to COCOBOD’s administrative expenses.

Speaking in an exclusive interview with The New Finder, Mr. Issaka highlighted critical issues affecting cocoa farmers, calling for reforms to prioritize their welfare and ensure the sustainability of the sector.

Transparency and farmer representation

At the heart of Mr. Issaka’s concerns is the lack of farmer representation in the governance of the sector. He questioned the composition of the Cocoa Price Review Committee, responsible for determining cocoa prices, noting that the committee operates without adequate input from farmers.

“The PNDC Law 81 that established COCOBOD mandates that there should be four people representing farmers on the board. However, as the National President of all cooperative unions in Ghana, I don’t even know who these representatives are,” Mr. Issaka revealed.

He argued that this exclusion undermines efforts to address farmers’ issues and deliver sustainable solutions.

He emphasized that transparency in decision-making is critical, suggesting that COCOBOD and the Price Review Committee must adopt measures to involve farmers in the pricing process actively.

Lessons from neighbouring countries

Mr. Issaka pointed to practices in other cocoa-producing countries as examples Ghana could emulate to improve its cocoa sector. He cited Côte d’Ivoire’s semi-liberalized system, where the government sets a minimum price, but farmers have the power to negotiate higher rates with buyers.

Similarly, he noted that countries like Togo and Nigeria operate fully liberalized systems, enabling farmers to sell cocoa directly on the market and receive prices aligned with international benchmarks.

“With cocoa trading around $9,000 currently, farmers in these countries benefit directly from market-driven pricing mechanisms. Ghana must consider adopting these systems to improve farmers’ livelihoods,” he said.

Financial challenges and unstable pricing

In addition to governance issues, Mr. Issaka highlighted financial challenges in the sector, particularly the instability of cocoa pricing mechanisms. He expressed concerns about COCOBOD’s ability to regulate the sector in a way that adequately addresses farmers’ needs.

This year’s shift from relying on syndicated loans to internal fundraising for cocoa financing has added to the uncertainty. While Mr. Issaka described the move as promising, he questioned its effectiveness, citing reports of funding shortages for cocoa purchases.

Impact on farmers

The funding shortfall has created challenges for Licensed Buying Companies (LBCs), which play a vital role in purchasing cocoa from farmers. Delays in reimbursement from COCOBOD to LBCs have led to financial bottlenecks, leaving many farmers without prompt payments.

“Without timely payments, farmers face difficulties meeting their financial obligations, investing in their farms, and sustaining their livelihoods,” Mr. Issaka lamented.

Call for reform

Mr. Issaka called for urgent reforms to address these issues. He urged COCOBOD and other stakeholders to implement measures that ensure transparency, fair representation, and financial stability in the cocoa sector. As Ghana, one of the world’s largest cocoa producers, grapples with these challenges, Mr. Issaka’s call underscores the need for immediate and effective solutions to safeguard the livelihoods of millions of farmers and the sustainability of the industry.