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Business News Sun, 30 Jun 2019

Cocoa floor price faces sabotage

The umbrella body for cocoa farmers in Ghana and civil society actors in the cocoa sector have cautioned the World Cocoa Farmers Organisation (WCFO) against any attempt to derail the cocoa floor price agreed in principle between Ghana and Ivory Coast, as well as traders and processors.

Ghana Cocoa, Coffee and Sheanut Famers Association (COCOSHE) and Ghana Civil-Society Cocoa Platform (GCCP), in separate statements, gave full backing to the floor price, saying everything possible must be done to make it a reality.

COCOSHE said it has taken notice of an interview granted by Sako Warren, Secretary General of WCFO, attempting to rally support in kicking against the floor price announced by Ghana and Ivory Coast.

$2,600 agreed in principle

At a meeting with cocoa traders and processors from June 11-12, they declared that they are suspending forward sales of cocoa beans for 2020-1 until their floor price of $2,600 per tonne of cocoa is met.

Protection for farmers

If implemented correctly, a minimum price could protect farmers from dire poverty and fluctuations in the cocoa market, like when the price of cocoa abruptly fell by 30 per cent three years ago, leaving many farmers struggling desperately.

World Cocoa Farmers Organisation against floor price

World Cocoa Farmers Organisation has asked Ghana and Ivory Coast to reconsider setting a minimum cocoa price.

Sako Warren, Secretary General of WCFO, told an online portal (Lumina Intelligence's Sustainable Food & Drink Podcast) that, “We believe that farmers should be the ones to communicate with their partners on what price they should sell their crop. We don’t think having a ceiling is the answer. We are more concerned about how farmers will get their money.

“Farmers are the business people who produce what they produce and have to sell it. So why should they have the farmgate price and not the actual price?” Warren asked.

International Cocoa Organisation expected $3,000

Michael Arrion, Executive Director of International Cocoa Organisation, a member organisation for cocoa consuming and producing countries, which was not part of the discussions, welcomed the move and said he would have expected a higher price.

“I was expecting something around $3,000,” he said.

Price fell from $15,000 per tonne in 1972 to $2,400

He observed that world market prices had declined dramatically since 1972 from $15,000 per metric tonne to $2,400 currently.

“If a farmer produces one tonne of cocoa per year, the average income will be $2,400 a year. So it is $200 a month, which is well below the poverty line if you consider the cocoa grower is feeding seven or eight people in the household,” he said.

Increased farmgate price

Arrion hopes the minimum floor price will lead to an increased farmgate price that would support farmer income.

COCOSHE warns WCFO

In a statement signed by the national president of the association, Alhaji Alhassan Bukari, COCOSHE accused WCFO of attempting to rally support in kicking against the decision announced by the two countries.

"WCFO in its communiqué curiously failed to acknowledge the broader issue of cocoa farmer empowerment or the importance of the floor price that has been agreed upon in principle, towards the effort to begin to pay cocoa farmers, many of who live in poverty, a remunerative price for our produce, so that every one of us can begin to afford an improved standard of living for ourselves and our families.

"The organisation chose instead to focus on the subsidiary matter of the suspension of the sale of cocoa beans in the successive crop season and goes on to make erroneous remarks and subsequently draws erroneous conclusions on the matter," it added.

The statement said WCFO's action is aimed at disrupting an important step to truly help alleviate the hardship of farmers, and further stated that the organisation cannot hold itself as a legitimate representative of cocoa farmers in either of the two countries.

It, therefore, called on Ghana Cocoa Board (COCOBOD) and Le Conseil du Café-Cacao (CCC) to sever ties, if any, with this organisation.

According to COCOSHE, the World Cocoa Farmers Organisation ignored the glaring fact that the suspension only stands pending the preparation for the implementation of the floor price by a 20-member technical committee composed of representatives from the major stakeholder organisations in the world’s cocoa industry, including representatives of farmers, following which the suspension will be lifted.

“The world needs to wake up and acknowledge the reality of the massive wealth inequality which is entrenched within the multi-billion-dollar international cocoa industry. We the cocoa farmers, who form the foundation of the industry, also earn the least share of the industry wealth.

“For decades, we have asked for change, and that is why we support this latest bold move by Le Conseil du Café-Cacao (CCC) and the Ghana Cocoa Board (COCOBOD), of Côte d’Ivoire and Ghana, respectively.”

“One will expect that any individual or organisation claiming to represent the interests of cocoa farmers will, at the very least, endorse a good attempt to empower them, and not issue a statement, as WCFO has done, flaunting an inflated sense of importance and kicking against the progress of same farmers,” it added.

COCOSHE said the executives of WCFO from their headquarters in the Netherlands have arrogated the powers of broad representation of cocoa farmers, when cocoa farmers in Côte d’Ivoire and Ghana, who are literally on the ground in their farms daily and collectively supply the world with 65% of its cocoa beans, have not even heard of WCFO, not to talk of witnessing the organisation contribute towards farmer empowerment.

It noted that this latest action by WCFO is obviously aimed at disrupting a very important step to truly help alleviate the hardship of farmers.

“We at COCOSHE, the true representatives of cocoa farmers in Ghana, find WCFO’s statements very unfortunate. We know our counterpart in Côte d’Ivoire shares in our disappointment.

“For the avoidance of doubt, we must state clearly that farmers, small farmer co-operatives and larger farmer associations in the two counties (Côte d’Ivoire and Ghana) were part of several consultative meetings which took place over the years in the lead-up to the event, held on the 11th and 12th of June 2019, where the decision on the floor price was reached and on which occasion we were also present to articulate our thoughts,” it stated.

COCOSHE said WCFO cannot hold itself as a legitimate representative of cocoa farmers in either of the two countries.

GCCP commends regulators

GCCP, in a statement, commended COCOBOD and its counterpart in Cote d’Ivoire, Le Conseil du Cafe-Cacao (CCC), for agreeing on a floor price (minimum price) of $2,600 per tonne of cocoa beans, and further proposing to buyers/processors/chocolate manufacturers on June 12, 2019.

It described the move as a historic feat that needs to be applauded by all, since it remains the first time the two leading cocoa producing countries have jointly decided on a floor price.

“Our greatest joy in this milestone is to see direct and obvious change in the farmgate price of cocoa beans, such that farmers income and living standard will improve, therefore directly contributing to the attainment of several of the global development goals (SDGs) including goals 1, 2, 3, 4, 8, 13.

“The floor price is very paramount to the livelihoods of cocoa farmers, especially in the wake of the debate on living income for cocoa farmers.

“We believe that this development is in the best interest of cocoa farmers and their households, since it will, at least, offer the farmer a fair share of the wealth that the cocoa industry generates.

“We call on the international cocoa sector to support the governments of Ghana and Côte d’Ivoire to push for the implementation of the floor price,” it said.

GCCP called on other civil society organisations in other cocoa producing countries to stand in solidarity with them and ask their governments to support this minimum price for all cocoa farmers.

It said the upcoming technical meeting with stakeholders to fine tune the full implementation of the floor price on the global cocoa market, slated for July 3, 2019, would prove that farmers are at the centre of this initiative and must benefit as such.

“We, however, wish to suggest to COCOBOD and CCC to include in the agenda of the upcoming floor price implementation meeting on July 3, 2019, its strategies/mechanisms to curb the possible imbalances in the cocoa sector as a result of the floor price.

“Attempts to regulate market forces typically end up failing, and sometimes even creating worse conditions in the long run.

“There is a long history of failed intervention in commodity markets, including cocoa, where price legislation resulted in excess supply/production, lowered demand, and an upsurge in stocks,” it stated.

Source: thefinderonline.com