Cocoa price debate: There’s a lack of understanding of how the system works – Fiifi Boafo

According to COCOBOD’s head of public relations, Fifi Boafo, the National Democratic Congress (NDC) and its parliamentary minority group’s discussion of the recent increase in cocoa prices is the consequence of a lack of knowledge of the pricing structure.

This comes after Minority Leader Dr. Cassiel Ato Forson stated that given the high price of cocoa on the global market, farmers should have received at least 2,500 cedis each cocoa bag.

The Ajumako Enyan Essiam MP claims that the government is taking advantage of cocoa producers because the price of the good has increased by the most since 1977.

But Mr. Boafo asserted on PM Express on Joy News that the NDC’s estimates about how farmers should be compensated are flawed.

“The exchange rate used is actually 11.5 and it was provided by the Bank of Ghana. Bear in mind, it is not a one-off thing where the season is open today and all transactions are done today and for that reason, you have to use the exchange rate for the day.”

“So, the exchange rate that was used was actually 11.5 and if you use 11 .5 you get the actual figure that was quoted. So you do not have to border yourself with all the mathematics and all the semantics that was done with it,” Mr. Boafo said.

In order to make an accurate projection for the cocoa season, he said, COCOBOD also engages in advance sales, where the bulk of harvests are sold before the season begins.

“When COCOBOD is starting the season, it gives a price that will be used for the purchase of cocoa the entire season. If you go to other countries, they will do the main crop season. The price will be different from the light crop season. In our case, it does not happen like that. What actually happened is that, beginning of the season, we know how much money is coming in and that is the basis of determining the price that is paid to the cocoa farmer. How do we know that? We know that because by the time you start the season, you have done about 80% of your crop already sold.”

“You know how much you are making going into the cocoa season and for which reason you are able to say that it is fair to give the farmer GHS1,308. If someone tells you today that you should use a figure of today to determine the price, obviously the person is unaware or has been briefed wrongly so the person does not know that by the time you start the season, the majority of your crop is already sold.”

“But, they do not take into consideration the fact that the cocoa was sold from last year, October to date. They actually use a figure from August to form the basis of this discussion and then come to the conclusion without taking into consideration the fact that there’s part of it that is freight, there’s part of it that is for shipment and they lump it together for their analysis.”

The sizes of the bags, Mr. Boafo said, are another factor that influences the pricing. He explained that if the size is below what is necessary for the market price, it is reduced, adding that “the discount is actually between 20 to 40 percent.”