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Business News Tue, 1 May 2018

World Bank Report on cocoa sector contradicts real situation – COCOBOD

COCOBOD has said a World Bank Report on the cocoa sector, released in June, last year, does not give a true reflection of activities in the cocoa industry.

The report, among other things, mentioned major inefficiencies in the cocoa sector including COCOBOD’s pricing mechanisms which has prevented competition in the cocoa subsector.

However, the Director of the Cocoa Health Extension Division at COCOBOD, Mr. Emmanuel Opoku, described the report as an ‘unnecessary’ criticism.

Speaking to the Goldstreet Business at an Open Forum to dialogue on Ghana’s agricultural sector on the theme, ‘Putting Ghana’s Cocoa Sector on a firmer footing’, Opoku said COCOBOD’s intervention in the cocoa sector deserves a ‘pat on the back’.

“The World Bank cannot teach us how to grow cocoa, buy cocoa and pay for cocoa,” he said.

He maintained that Ghana has a competitive advantage in the cocoa industry, explaining that a previous World Bank suggestion to COCOBOD on the need to allow farmers to sell directly to companies abroad was not considered viable.

“Some years back the World Bank came to tell us to allow every farmer to sell cocoa abroad. We analyzed the suggestion and realized it wouldn’t be in our interest. We only liberalized the internal marketing. But Cote d’voire embraced all options and experienced massive confusion after,” Opoku disclosed.

Cote d’voire, he said, is currently seeking to go back to where it used to be but that opportunity has eluded them.

COCOBOD, Opoku indicated, remains resolute in not compromising the export marketing of cocoa to any foreign institution.

Notable effects of the World Bank’s suggestion in the Ivorian cocoa sector, includes the inability of that country to guarantee price for farmers, price drop in cocoa affects farmers with few people gaining from the situation.

The situation, Opoku clarified, is different for Ghana, where COCOBOD is able to take advantage of world market price fluctuations. Ghana can hold on to its stock in bad times and sell when the price is good.

A case in point is government maintaining the producer price – an assured sum given to farmers – for the 2017/2018 crop season.

Farmers are to receive GHS 475.00 per bag of 61.5 kg in spite of the fall in the price of the commodity on the international market.

“That system has worked well and the World Bank has acknowledged COCOBOD for that. Their issue is the marketing aspect, where government guarantees price for famers”, Opoku said.

In the report, the World Bank said COCOBOD, had failed in stabilizing farm gate prices at levels that permit farmers to earn an adequate return on their land, labour and capital.

The report recommended a renewed focus on price stability, saying it would help reduce the economic uncertainty faced by cocoa farmers, facilitate long-term planning and boost productivity.

The World Bank was also unhappy about COCOBOD’s dominant role in the supply chain of the cocoa subsector, describing it as “a source of uncertainty and inefficiency.

“Though often referred to as ‘free inputs’, the cost of the inputs supplied by COCOBOD reflected in the prices farmers receive for their produce; moreover input distribution is often erratic and is subject to corruption and capricious political interference,” the report indicated.

It explained that the fixed price paid by licensed buying companies to farmers had effectively eliminated the possibility of price competition or product differentiation, adding “it has discouraged farmers from investing in quality beyond the minimum standard”.

It further attributed the high marketing costs to poor road infrastructure, inefficient port handling and costs associated with quality control.

Source: goldstreetbusiness.com
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