Second-Biggest Cocoa Grower Ghana Won't Reduce Farmer PayBy and
Price will be unchanged or may even rise, regulator says
London cocoa futures have fallen to lowest in five years
Ghana’s cocoa regulator ruled out cutting the price it pays farmers for the new harvest that starts in October, at a time when nations are working together to stem a rout in prices.
The amount paid to farmers in the world’s second-biggest grower will be unchanged and may even rise in the new season, Joseph Boahen Aidoo, chief executive officer of the Ghana Cocoa Board, said in Abidjan, the commercial capital of neighboring Ivory Coast.
Aidoo was attending an emergency meeting of International Cocoa Organization members, where they agreed to coordinate production strategies to fight a plunge in prices that has pushed London futures to a five-year low. Aidoo’s comments come after top producer Ivory Coast in March said it would lower the price it pays farmers for the smaller of two annual harvests starting this month. It was the first cut since the country reformed the industry in 2012.
“That is the price we have now for Ghana,” Aidoo said in an interview. “We will maintain that or we will go up a little. Ghana never goes down.”
At the beginning of the season in October, Ghana’s regulator set a price equivalent to 7,600 cedis ($1,794) a metric ton. Futures in London have since fallen by a third to 1,450 pounds ($1,857) a ton amid forecasts for a glut.
Shortfalls between market prices and farmers’ pay will be met from Ghana’s stabilization fund, Aidoo said. He declined to comment on the fund’s available reserves.
“At some point, if the price continues to fall, it will exhaust our stabilization fund and we can be in trouble,” Aidoo said. “So far, we’re managing.”
Ghana lost almost $1 billion in export revenue over the past six months due to falling prices, Aidoo said. He was appointed head of the regulator in January by President Nana Akufo-Addo, whose New Patriotic Party pledged to boost growth by investing in agriculture. The government wants to increase cocoa output from about 850,000 tons this season to more than 1 million tons next year.
Cocoa-growing nations are also planning to promote local consumption of chocolate, ICCO Chairman Luis Valverde said Monday. The association is this week inaugurating its new headquarters in Ivory Coast after 44 years in London.
Producing countries’ plans to reverse tumbling prices don’t imply output cuts, Valverde said in an interview. Improved transparency by cocoa producers and users will assist growers’ production strategies, he said.