Ghana and Cote d’Ivoire have reached an agreement with stakeholders in the cocoa industry to set a floor price mechanism for the priced commodity, putting an end to open market trading. This is aimed at enhancing the income of small-holder farmers most of whom bear the brunt to uphold the cocoa industry but sell at low prices.

The new minimum price of $2,600 per tonne was accepted during a recent two-day summit of global cocoa industry stakeholders on farmers’ income in Accra, where the proposal was made to buyers, processors, and manufacturers. Both countries have thus suspended the sale of the 2020/2021 crop indefinitely to prepare for the implementation of the floor price.

Speaking on the “historic” development, the Chief Executive Officer of Ghana’s Cocoa Board, Joseph Boahen Aidoo, said “this is the first time when the producers have called consumers and the first time whereby suppliers have called buyers to come and engage on price… Over the years it has been the buyers who have determined the price for the suppliers.”

Accounting for around 60 – 65 percent of global cocoa supplies, Ghana and Cote d’Ivoire are the world’s largest producers of cocoa but the current pricing makeup where prices are dictated by buyers does not show for their contribution to the industry. The global chocolate market is worth around $100 billion, but a meagre $6 billion go to cocoa producers, the pillars of the value chain.

This situation also leaves the farmers in a deplorable and unattractive economic status. To address the issue, the western African nations prior to the summit had threatened to cut supplies, refusing to sell their produce in the international market below the agreed minimum price. The International Cocoa Organisation’s average price stands at $2,436.

Meanwhile, the Ghanaian Times reported earlier that the country’s Vice President, Dr Mahamudu Bawumia, assured cocoa farmers of the government’s commitment to implement policies ensuring that the farmers get a fair share of the wealth generated in the cocoa industry. The VP denounced the condition of farmers which if not addressed, he says would put the industry at substantial risk to the national economy, both in its contribution to employment and to the growth of the country’s economy.

“The fact that the majority of farmers are unable to cater adequately for their family, beyond mere poverty existence, is simply unconscionable. It is startling to learn from the president of the World Cocoa Foundation that only six percent of the total value of chocolate goes to farmers. The percentage may be lower in the case of cosmetics and pharmaceutical end uses,” Bawumia said.

In addition to low incomes, the Vice President explained that cocoa farmers faced a number of challenges, including the growing restrictions in farm expansion into protected forests and high cost of inputs and farm maintenance cost.

Bawumia added that the government has been supporting the Ghana Cocoa Board to implement various interventions to enable farmers to improve productivity, preserve the ecosystem, and discourage unethical labour practices. Albeit, without a favourable price, the effects of the efforts would not be enough to change the situation of farmers.

All of these make a case for the implementation of a favourable price for the commodity to complement the government’s effort in ensuring that farmers benefit substantially from the cocoa value chain.