After successfully negotiating a ‘historic’ fixed minimum price for cocoa produced in Ghana and Cote d’Ivoire, the two countries have scheduled 2020/2021 as takeoff season for implementation of the agreement.
Per the provisions of the agreement, an amount of $2,600 has been stipulated to be the fixed minimum price per tonne of Cocoa, equivalent to $2,700 CIF.
According to the CEO of COCOBOD, Joseph Boahen Aidoo, the floor price would determine Cocoa prices for 2020/2021 because 2019/2020 Cocoa has already been sold at existing prices.
In July 2017, President Nana Akufo-Addo together with his counterpart in Cote d’Ivoire, President Alassane Ouattara began negotiations for a fixed producer price for Cocoa. The negotiations carried through for about two years and saw a successful conclusion in 2019 with $2,600 set as a floor price for a tonne of Cocoa beans.
This, however, is the first time African Cocoa producing countries are dictating prices for international processors and marketers.
At a press briefing Monday, July 8, 2019, Mr Boahen Aidoo emphasized that “this new arrangement fixes a constant extra $400 for every tonne of Cocoa from the two countries, so, for example, with the 900,000 metric tonnes of Cocoa produced last year, it would have fetched about $360 million from the upper level of the supply chain to us here in Ghana at the lower level of the Cocoa value chain.”
He noted that the new floor price would subsequently ensure a decent income for Cocoa farmers.
In a related development, however, Mr. Boahen Aidoo added that this new height achieved by Ghana and Cote d’Ivoire has added an extra need for both countries to adhere strictly to international standards in Cocoa production, thereby eradicating all forms of child labour and deforestation associated with Cocoa farming in some rural areas.
On the issue of child labour in the Cocoa sector, Mr. Boahen Aidoo emphasized the need for a clear distinction between child work and child labour, which according to him, are two different things.
He revealed that stringent policies would be rolled by the board to deal with issues of child labour and deforestation in Cocoa producing areas in the country.
Mr. Boahen Aidoo further added that a stabilization fund account would be created for the two countries to serve as a backup, to boost prices in case of a fall below the stipulated floor price.
“…a stabilization fund account shall be established under the cocoa initiative of both countries and provided for in the Charter, two accounts to be set up for each country within the secretariat in Accra.”
“Any extra value above $3000 CIF or $2900 gross FOB of the Achieved weighted Average will be placed in these accounts.”
Thus, the only reason for which money would be disbursed from the stabilization fund account will be in support of a falling floor price.
The new agreement would also give the Ghana COCOBOD enough capacity to undertake more corporate social responsibilities.