The Ministry of Trade and Industry and its Transaction Advisor, Price Waterhouse Coopers are concluding the Conditions Precedent to activate the Concession Agreement, a strategic investor for the Komenda Sugar Factory.
The sector Minister, Allan Kyerematen said the conclusion of the agreement with the Strategic Investor, Park Agrotech Limited would enable them to commence operations at the factory.
Mr Kyerematen said this when he appeared before Parliament to respond to a question by Mr. Samuel Atta-Mills, Member of Parliament (MP) for Komenda/Edina/Eguafo/Abrem on why the Komenda Sugar Factory is still closed, and what has happened to the Strategic Investor the country was promised.
Hon. honorable explained that Park Agrotech Limited was an agro-processing company based in Ghana, who together with its India-based technical partner, has significant expertise in the sugarcane cultivation and sugar processing industry.
He referred to the various incentives that Park Agrotech was requesting as part of the proposed Concession Agreement.
He said working with the Transaction Advisors, the Ministry has painstakingly worked through various requirements and requests.
As part of the arrangements, Park Agrotech has applied for and has been granted One District One Factory (1D1F) status by the Ministry.
This he said would enable Park Agrotech to take advantage of the incentives and benefits as approved by Parliament for 1D1F registered companies and to commence operation at the Komenda Sugar Factory expeditiously.
Mr. Kyerematen further stated that the Ministry has instructed the Transaction Advisor and Park Agrotech to ensure that the Conditions Precedent to the Concession Agreement and a road map for the opening of the factory is finalized by the end of August to enable operational activities to commence before the end of this year.
The International Fund for Agricultural Development (IFAD) led by Togolese Gilbert Fossoun Houngbo wants to further support the local agricultural sector over the next 6 years.
The consultations opened a few days ago in Lomé have enabled IFAD and officials from the Togolese Ministry of Agriculture to agree on the priorities.
Essentially, there are four major projects focused primarily on improving agricultural yields and productivity; facilitating access to finance, and the market for farmers.
Support for actors in agricultural value chains through the acceleration of MIFA S.A; the valuation and transformation of productions via the Adéticopé industrial platform (PIA); the development of the Kara pilot farm; the implementation of the agricultural land law for the securing land transactions are the main pillars of cooperation.
First. This will involve developing inclusive production systems that sustain access for small producers and their organization to technologies and knowledge with macro-resilient performance.
In this context, a number of areas of action have been listed: the development of sustainable solutions in terms of water management and management, the implementation of land reforms and land consolidation processes, the development of new fertilization formulas of soils, access for small producers to efficient and climate-resilient inputs, modernization of agricultural advice and the promotion of digital technologies, support for producer organizations in the agro-ecological transition process.
Second. Facilitating the integration of family farms of rural women and youth into agricultural markets and business partnerships with a view to increasing added value and creating employment opportunities.
The proposed investment actions relate, among other things, to infrastructure facilitating the connection of production basins to different market segments, processing and packaging technologies and techniques for marketing, partnership initiatives, productive activities with agro-SMEs, aggregators, and institutional markets, support for entrepreneurship of young people and women in agro-sylvo-pastoral sectors, strengthening of producer organizations for the implementation of the strategy of the productive alliance.
Third. Institutionalization of dialogue at the sectoral level with the active involvement of producer organizations of local authorities in the private sector in the process of preparing for the implementation of agricultural development strategies and programs in the coordination.
To do so, the investments proposed to relate to the strengthening of peasant leadership, including the female and youth components of producer organizations in order to improve their condition in the processes, support for the improvement of the planning, monitoring, and evaluation system. sector and finally support for initiatives aimed at improving civic engagement.
Basically, IFAD’s portfolio in the implementation of all its actions includes a project in the completion phase (National Project for the Promotion of Rural Entrepreneurship-PNPER), a mid-term project (Promifa), and an start-up phase (PRIMA).
The new IFAD country strategy (COSOP) once validated by the parties will be rolled out over a period of 6 years (2021-2026).
Cocoa Abrabopa Association (CAA), Alfred Ritter GmbH & Co KG, Fuchs & Hoffmann, and Ascot have collaborated to set up an economically viable and resilient cocoa production system to help improve the lives of cocoa farmers and their households.
The 3-year sustainability project seeks to target about 526 members and their households and this would be implemented in Daboase, Aboso, and Bogoso in the Western Region of Ghana.
The collaboration was launched virtually and conveyed representatives from each organization.
The main components of the joint program include Training members and field staff with the innovative Farmer Business Schools (FBS) approach; The implementation of an integrated and supportive Child Labour Monitoring and Remediation System (CLMRS); Boosting the household income from cocoa and other agricultural products and enhanced shade trees seedling planting and monitoring program.
The reps explained that the Farmer Business Schools (FBS) pieces of training would build the capacity of the members and their spouses in order to take advantage of the skills and knowledge to improve their incomes and food supplies.
CAA staff would be trained externally to strengthen the service delivery, refreshed knowledge, and skills which go beyond the technical content.
“With regards to the CLMRS component, existing child labour cases and families at risk of child labour and school attendance will be identified, child labour risk assessment which consists of household surveys, community profiling, and awareness-raising will be done at the start of the program.
Data gathered in the first year will be used to develop the model further for subsequent years with a remediation plan and members categorized into a low and high risk to child labour.
This should lead to an increased percentage of children of CAA members and their sharecroppers attending school over a period of 3 years” the reps said.
They further explained that the Living Income component is split into 2 elements where a study would be carried out to identify the status quo, develop targeted activities and measure the progress towards a living income.
“The project would establish a household income baseline for the targeted member households and provide suggestions for cost-effective monitoring of the household income in the following years.
The study would also provide recommendations on improving the household income which includes from cocoa farming and other agriculture-based livelihoods particularly for women” they mentioned.
QU Dongyu, FAO Director-General, at the G20 Environment Ministerial meeting.
The Director-General of the Food and Agriculture Organization of the United Nations (FAO), QU Dongyu, today called on G20 Environment Ministers to step up joint efforts, increase investment and work more closely with FAO for game-changing impacts on the planet.
Qu made the call at the G20 Ministerial Meeting on the Environment, which discussed solutions for nature and sustainability – from combating climate change to building sustainable cities.
“Today, humanity faces a triple planetary crisis of biodiversity loss, climate crisis, and the impact of the pandemic,” said the Director-General.
“To have healthy food, we need a healthy environment,” stressed Qu in view of the global challenge of having to meet a growing demand for food and other agricultural products whilst reducing greenhouse gas emissions as well as conserving biodiversity, sustainably manage natural resources, including water, and protect and restore ecosystems.
Qu made a strong case for increasing water use efficiency and fostering sustainable water management to address water scarcity and improve water and food quality.
The lives of over a billion people are severely constrained by water scarcity or shortages; almost a billion hectares of rain-fed cropland and pastureland are severely affected by recurring drought, and over 60 percent of irrigated cropland are under high to very high water stress.
These water-related challenges could be addressed, argued Qu, with the help of digital innovation, more effective governance mechanisms, and investments.
The FAO Director-General also emphasized the need for stepping up biodiversity-friendly approaches, including more investments in related actions.
“Current levels of investment are highly insufficient,” said the FAO Director-General.
Yet, if we could fully fund the goal to restore degraded land, the target of halting deforestation could be achieved by 2030, added Qu.
The benefits of these would be significant. For example, reversing deforestation will help mitigate climate change and reduce the risk of future zoonotic spill-overs. Reversing biodiversity loss and land degradation can reap $1.4 trillion per year.
“We need to repurpose agricultural subsidies with harmful effects on our climate and biodiversity. We need to invest in the long-term Research & Development to create the innovation and technologies required for producing more with fewer emissions and within our environmental boundaries,” urged Qu.
Agricultural sectors offer key solutions to the biodiversity and climate crises.
To support these solutions, Qu also called for an enabling environment – including institutions, policies, and financial backing for the small-scale producers, family farmers, and Indigenous Peoples, who are the true in-situ custodians of our natural resources.
The recently launched UN Decade on Ecosystem Restoration, led by FAO and the UN Environment Programme, provided an “excellent opportunity to mobilize our collective efforts”, noted Qu.
He emphasized that FAO’s work was guided by the need to transform agri-food systems, making them more efficient, resilient, inclusive, and sustainable – all with the aim of achieving FAO’s “four betters”: Better Production, Better Nutrition, a Better Environment, and a Better Life, leaving no one behind.
FAO for nature. The planet is losing biodiversity at an alarming rate, and FAO is calling for urgent action to reverse this trend.
Putting in action what it recommends, FAO is mainstreaming and scaling up biodiversity-friendly approaches and actions – from developing policies, facilitating dialogues to implementing projects and supporting countries doing the same – across the food and agricultural sectors.
FAO, with its Members and partners, is contributing to the Post-2020 Global Biodiversity Framework to be adopted at the next UN Biodiversity Conference that supports the sustainable use, conservation, and restoration of biodiversity and ecosystems.
As part of the efforts of the UN Decade on Ecosystem Restoration, FAO will focus on restoring ecosystems to enhance food security, transform agri-food systems, address climate change and preserve biodiversity.
The Artisanal Palm Oil Millers and out-growers Association are introducing digital technology into the palm oil industry to curtail the menace of SUDAN IV. This is to ensure authentic and healthy Palm oil for the global market.
The association has developed an app for both the app store and the play store which would be launched on Wednesday 28th July 2021 at the MENSVIC Grand Hotel at 10 am to enable consumers to track the source of the palm oil and the producers before purchasing for consumption.
Palm oil is one of the most useful and nutritious cooking oils in Ghana. Sudan IV dye is used as a hue of enhancer in palm oil despite the ban as food pigment due to its carcinogenicity and mutagenicity by the International Agency for Research on Cancer (IARC). As a food dye, Sudan IV is considered an illegal dye, mainly because of its harmful effect over a long period of time.
Paul Amaning, the President of the Association, said the app called the Artisanal Palm Oil would perform two functions. According to him, the app first of all would allow customers to order palm oil from the comfort of their homes and have it delivered to them.
Secondly, the function of the app is to help customers verify the source of the palm oil with the aid of a QR code to guard customers against consuming any palm oil containing Sudan IV.
The palm oil industry should adopt the technological approach to succor to make sure all producers produce pure and hygienic palm oil to help Ghana meet the world market specification. The industry is currently dominated by small-scale producers who are responsible for the production of about sixty (60) percent of the total palm oil production in the country, which is close to about a hundred and twenty thousand metric tons a year.
Some of the dignitaries to grace the occasion are Prof Kwabena Agyapong-Kodua, Chair of the program, Hon. Ursula Owusu-Ekufful, Minister For Communication, as special guest, other invited guests are Alhaji Hanan Abdul-Wahab, CEO for NAFCO, Mrs. Kosi Yankey- Ayeh, GEA, Mr. Frank Asiedu Bekoe, Director of Political Affairs at the office of the chief of staff, Mrs. Delese Mimi Darko, CEO of FDA amongst others.
The Agribusiness Value Chain Federation, Ghana (AGRIFED) & Mel Consulting Limited and the West Africa Centre for Crop Improvement (WACCI) at the University of Ghana, Legon have partnered to effectively build the resilience of smallholder farmers to adapt to the negative impact of climate change through research and development.
Climate change has become a pervasive global crisis and its evidence and impacts are becoming rampant in Ghana. The agriculture sector is very sensitive to the impact of climate change due to the heavy reliance on water. Smallholder farmers are predisposed to be impacted by climate change. The goal of this agreement is for the Parties to collaborate in research, development and implementation of climate-resilient programmes and projects that build the adaptive capacity of smallholder farmers along the agribusiness value chain.
This partnership will create a bridge to facilitate the creation and interchange of information, as well as scientific, technical, financial and institutional collaboration in the area of agricultural, social and environmental projects development and implementation between the agribusiness sector and academia.
Speaking on the MoU, the executive director of AGRIFED and MEL Consulting, Ms Lucy Akua Kyerede Quainoo stated that in the visible light of changes in weather patterns due to climate change, more have to be done in the adaptation and mitigation strategy space using Agritech. Such pioneering initiatives in Crop growth prediction forecast goes a long way to enhance production and allied activities such as Agrifinance and Agricultural insurance will ensure the success of the agriculture sector in Ghana”
Giving specific roles to be performed by the parties as defined in the MoU, AGRIFED is to provide technical advice to the WACCI in the development, management and financing of programmes and projects, facilitate project financing and together with WACCI, they shall develop a framework for project/ programme development, management, financing and communication.
WACCI’s responsibility is to provide crop research data that might be useful for farmers’ adaptation to the ugly impacts of climate change. Such data will include drought-resistant crop varieties and sustainable agricultural practices.
Prof Danquah of WACCI acknowledged the importance of this collaboration. “The current trends in weather patterns require such synergies to ensure that production activities are taken to the next innovative level in agronomy and meteorology”, Prof said. He added that WACCI’s work in innovative agriculture is brought to focus here and looks forward to a successful project.
Agribusiness Value Chain Federation, Ghana (AGRIFED) & Mel Consulting is an organization with the purpose to facilitate services along with production, processing, and marketing activities, financing, and capacity building of Agricultural Value Chain Actors in Ghana.
West Africa Centre for Crop Improvement (WACCI) is an academic research institution that is working towards eradicating food insecurity in West Africa through the training of the people needed to breed and improve food security crops for farmers who currently cultivate unimproved low yielding varieties
Food consumption is one of the critical issues of late, especially fruits and vegetables due to the excessive usage of agrochemicals for production. This has generated a lot of diseases like kidney and liver diseases to consumers. The safe way of consuming healthy and nutritious food is to produce them organically, especially vegetables, therefore, to ensure certified organic produce by producers to consumers, the products should bear Participatory Guarantee System (PGS) mark.
PGS, a local certification system for the domestic markets that are directly managed and implemented by organic producers and consumers has organized a workshop to prepare its members for the system continuity and sustainability to assist farmers to produce organic products in Ghana.
The organic products in Ghana are produced according to the Ecological Organic Standard of Ghana (EOSG) bears the PGS mark that is only guaranteed to the organic producers once they are verified and approved through the PGS.
Olawumi Benedict, the Coordinator of PGS Ghana said farm product could be called organic when it passes the systems of inspection that conform to the moral and ethical standards across the world.
She mentioned that all farm produce that has PGS certification are organic, “PGS helps to assure the consumers that whatever is purchased that has PGS certification logo on it has gone through the inspection process and we are assuring the consumers that what they are consuming is safe, healthy, environmentally friendly and organic”.
PGS bridges the gap by assuring the consumers and the processors of the rightful activities of the farmers in the production process. This she said, gives consumers confidence and the trust of every product that has the PGS logo as safe and organic.
She called on all farmers who are interested in organic farming to register with PGS for capacity building, market accessibility, and other benefits.
“If PGS members in Ghana succeed and transform this project into Ghanaian system, and continue to provide good services to the farmers to convert from conventional agriculture into more natural agriculture that would not harm but produce healthier products for the population, it would be a great benefit for both the farmers’ and the consumers’ health”, Bernard Conilh De Beyssac, a consultant for the project said.
According to him, it is his mandate as a consultant to building the capacity of the PGS members to sustain the certification process and continue providing services to smallholder farmers to certify their organic products.
He called on the PGS members and the supporting partners to help sustain the systems since organic production is the future of Ghana’s agriculture.
As a projects implementation organization, IFOAM, a membership-based non-governmental that works to foster the activities of organic producers across the globe assisted the implementation of PGS projects in Ghana.
IFOAM is a capacity-building organization that facilitates the transition of farmers to organic agriculture, raises awareness of the need for sustainable production and consumption, and advocates for a policy environment conducive to agro-ecological farming practices and sustainable development.
“We will decide on how to support the activities of PGS in Ghana, several activities from us would be focused on logistics, monitoring, and evaluation since PGS is a newborn baby”, Sara Anselmi, a representative from IFOAM assured during the workshop.
Speaking to Agric Today, Sara explained that IFOAM would take into account all the supporting points that are raised to see the continuity of the project in Ghana. “We will take all these points into account and try to adjust our actions and our inputs towards this project’s sustainability”, she added.
In view of the PGS members, the farmers who have been enrolled in the scheme have appreciated PGS systems of education, training, and good agriculture practices by the members concerning how to grow organic products for the market. This was underlined by the PGS Greater Accra and Volta rep, Dr. Florence Vanderpuye.
Dr. Vanderpuye mentioned that the strategic plan that has been developed by the team would help to boost farmer’s confidence and know the direction of the systems in organic production.
The PGS systems according to her, are market linkages, education and training skills development, capacity building in other areas like business development, and linking the governmental institution with the system.
She called on farmers who want to grow food products organically to register and be part of the system to promote healthy organic food products for Ghanaians.
The Ministry of Food and Agriculture through its Veterinary Services Directorate has confirmed the outbreak of the Highly Pathogenic Avian Influenza disease, otherwise known as Bird Flu in some parts of the country. These are the Greater Accra, Central, and Volta Regions. The outbreak of the disease follows the detection of similar cases in neighbouring countries since January 2021.
Through effective surveillance and disease control management, the Veterinary Services Directorate has prevented the extension of the disease into Ghana until now. Cases of the Bird Flu disease were previously recorded in 2007, 2015, 2016, and 2018, with a significant economic impact on affected poultry farmers. The zoonotic nature of the disease calls for public alert and vigilance to mitigate the possible impact on the poultry industry and public health in general.
Accordingly, the Ministry announces the following measures for immediate compliance:
A total ban on the importation of Poultry and Poultry products from neighbouring countries where the prevalence of the disease has been confirmed.
A ban on the movement of Poultry and Poultry Products within and from the affected regions and districts to other parts of the country, and strict inspection and issuance of permits to cover the movement of all poultry and poultry products from unaffected parts of the country.
Intensification of public awareness and sensitization by Regional Coordinating Councils and District Assemblies, especially in the affected areas.
To ensure public safety citizens are advised to: i. report any unusual death of domestic poultry and wild birds to the nearest Veterinary office and public authorities, ii. avoid the handling of dead birds with bare hands at all cost, iii. consume only well-cooked poultry meat and poultry products.
The Ministry wishes to assure the general public that there is no cause for fear and panic since the Veterinary Services Directorate is taking all necessary steps to contain the outbreak and spread of the disease to other parts of the country. The success of this call hinges on the full cooperation of the general public.
For further inquiries, kindly contact Dr. Patrick Abakeh, Director Veterinary Services Directorate on phone number 020-8240734.
Poultry farmers and feed-millers across the country are expressing worry over a looming collapse of the local poultry industry due to the scarcity and high cost of raw materials for feed production, which could result in significant job losses and exacerbation of food security challenges.
The Greater Accra Poultry Farmers Association (GAPFA) has said despite the gains of the government’s ‘Planting for Food and Jobs’ initiative, at least in the increasing number of beneficiaries yearly, the policy has benefitted players in neighbouring countries more than the local economy – as poultry farmers in Burkina Faso, Ivory Coast, and Togo usually source their materials from here and are willing to pay any amount.
The situation, according to GAPFA, could collapse the local industry if the government does not come to the sector’s aid.
GAPFA’s President, Michael Nyarko Ampem, told B&FT that the association, and by extension the poultry industry, is having to deal with the scarcity of maize and wheat bran, and the attendant high cost of maize, wheat-bran, and soya bean cake. These ingredients, he said, constitute about 80 percent of the total volume of ingredients needed to produce feed for poultry birds.
Indeed, in June 2020 a 50kg bag of maize was selling for GH¢65. Fast forward to November last year and the commodity’s price shot up to GH¢100; and in June this year, 2021, the same commodity at the same weight is selling for GH¢130; and the same applies for wheat-bran and soya bean cake.
“The resultant effect is that the working capital of GAPFA and most Feed-millers has been drastically reduced. But even more importantly, these cereals are hardly available on the market for us to purchase,” Mr. Nyarko Ampem said at GAPFA’s press briefing.
The effect of high prices for the cereals is that some farmers in the industry have had to sell their birds to sustain themselves in the business, with some of the farmers and feed mills being shut down completely.
Job losses GAPFA estimates that more than 3,500 jobs are on the line in the value chain this year, as the association alone is made up of some 1,775 farmers who purchase their feed from its factory.
Apart from GAPFA, there are another 21 feed mills currently operating in Ghana. The poultry value chain – comprising seed producers, crop farmers, warehouse owners, transporters, feed mills, hatcheries, hotels, restaurants etc., – employs more than five million Ghanaians.
Gains of the PFJ Since its introduction, the government’s ‘Planting for Food and Jobs’ initiative has seen an increase in farmer participation. At its inception in 2017, over 200,000 farmers were said to have participated in the policy, according to MoFA. In the second year (2018) MoFA indicated that nearly 700,000 farmers benefitted, with the programme reaching one million farmers in 2019. In 2020, 1.2 million farmers were enrolled on the policy – with the initiative projected to benefit 1.5 million farmers in 2021.
Current data obtained by the B&FT from MoFA indicate that the gains of PFJ in regard to maize production have been on the increase since 2017. The same applies to other cereals including rice, sorghum, and soybean. The policy’s maize production output in 2017 was 485,100 metric tonnes (MT); 2018 – 637,200 MT; 2019 – 1,522,561 MT; and 2020 – 2,791,515 MT.
Response to PFJ gains But GAPFA said these gains are not reflecting on the ground, as there is an inadequate volume of maize on the market to support current feed production demands. The association alone processes 160,000 MT of maize in a year, excluding the capacity of the other 21 feed mills nationwide.
Indeed, GAPFA and the Feed-millers’ association have said the current situation will negatively impact the country’s quest to ensure food security in the immediate future. Though the local poultry sector has lost some US$5million to the COVID-19 pandemic as purchases from restaurants, hotels, events drastically fell from last year, the situation has not changed much as the virus still lingers.
Ghana’s poultry imports, however, continue to soar yearly; with imports currently estimated at US$350million annually as the local industry accounts for a share of just 10 percent. This circumstance will also negatively impact the government’s ‘Grow Ghana, Eat Ghana’ agenda.
Requests GAPFA and other poultry industry players are therefore calling on the government, through the Ministry of Food and Agriculture, to make wheat-bran and other ingredients readily available. The association also appealed for the government to sign an MoU with flour and feed millers to supply at least 50 percent of total requirements for the feed mills at a mutually agreed price.
A cocoa pricing agreement designed to protect farmers in Côte d’Ivoire and Ghana from destitution is being circumvented by multinationals, the main buyers of cocoa beans.
Cocoa is the plant from which chocolate is made. Côte d’Ivoire and Ghana together account for 65% of global cocoa production, but farmers in these two countries earn less than 6% of the chocolate industry’s total revenue.
The cocoa bean value chain has five major segments. The first is cocoa bean production, which involves local farmers. The second is sourcing and marketing, which involves local and international traders and exporters of cocoa beans and semi-processed products. The third is processing, which involves grinders and chocolate manufacturers. The fourth is distribution, which involves retailers. And finally, there are the consumers.
Cocoa growers’ share of the final product has reduced over the years as traders, brands and retailers have taken a bigger cut. For example, according to Fairtrade, when cocoa prices were high in the 1970s, cocoa accounted for up to 50% of the value of a chocolate bar. This fell to 16% in the 1980s and today farmers receive around 6% of the value. Cocoa farmers in Ghana now make roughly $1 a day (this often includes being subsidised by the Ghanaian government). Those in Côte d’Ivoire make around $0.78 a day.
Support journalism that you can trust The living-income differential programme, launched last year, was designed by both countries to help cocoa farmers escape poverty by adding a premium to the prevailing market price. But only a month after the launch of the programme, authorities in the two countries disclosed that confectionery multinationals were refusing to pay farmers the agreed living wage.
The US multinational Mondelz, for instance, was recently accused of paying a negative country differential. Last year another US firm, Hershey, bought from futures exchanges to avoid paying the differential and other companies are changing their buying patterns as well.
I have studied the relationship between growers in the two countries and global buyers in previous articles. As it is currently structured, the living-income differential programme is sending the wrong signal to cocoa farmers. And multinational buyers will benefit from it at the expense of farmers.
The main problem Just before the October 2020 cocoa-growing season, Ghana announced that the guaranteed sum paid to cocoa farmers would increase by 28% per tonne for the new growing season. Côte d’Ivoire implemented a 21% increase in the price of the main crop of the 2020/2021 season.
These announcements were part of the living-income differential programme, which made headlines in 2019 when the two countries came together to form an agreement to provide a living wage to more than a million small scale cocoa farmers.
On the surface, the agreement looked like a cartel; it was even dubbed “COPEC”, a snide reference to the oil-exporting cartel OPEC. But there are many problems with this arrangement. Both Ghana and Côte d’Ivoire were betting on the willingness of multinational companies to exhibit compassion by declaring their support. Instead of restricting supply to increase prices, the mechanism simply adds a premium of $400 per tonne to prevailing world market prices (which are mainly affected by the amount of cocoa in the market), without addressing market leakages and the effect of the premium on both world market prices and future supplies.
Unsurprisingly, there has been a general decrease in demand since the programme was launched, along with reports of confectionery multinationals’ buying indirectly to avoid the premium. Hershey openly diversified its cocoa sources the moment the living income differential came online. Other confectionery multinationals are doing the same indirectly because the official demand is now significantly lower than in previous years. Multinationals are blaming this on the effect of COVID-19 on cocoa demand.
However, this explanation could be an excuse, because there is some evidence that confectionery sales have actually increased during the lockdown. Both Ghana and Côte d’Ivoire are likely to have a great deal of unsold cocoa at the end of the season, which will further reduce the market price.
Indeed, the Ivorian government has already announced a reduction of producer prices by 9% by April 2021; Ghana may not follow suit but the debt incurred by the Cocoa Board could well increase. Both countries have promised to name and shame companies that are not complying with the payments.
The obvious problem with the differential is that it is bound to increase cocoa supply (because more farmers will move into cocoa production) and reduce demand through official channels. Both outcomes will further increase the supply of cocoa and drive prices downward. The $400 premium or more could be wiped out of cocoa prices as a result of the extra supply that the programme creates.
One bargaining position available to African countries is to exclude from sustainability programmes any firms that fail to comply with the programme. Multinationals claim that sustainability programmes are for the good of farmers, but they actually perform practical commercial functions such as guaranteeing supply and giving certain firms the stamp of ethical sourcing needed to placate environmental and humanitarian groups and possibly avoid lawsuits.
Solving the problem One solution to the above problem, which both Ghana and Côte d’Ivoire are trying to solve, is to control and restrict supply instead of simply adding a price premium.
In 1987, when cocoa prices collapsed, the then president of Côte d’Ivoire, Félix Houphouët-Boigny, responded by implementing a withholding scheme. The country then controlled roughly 40% of the market. However, this was not enough to control cocoa prices. Scholars have often suggested that Houphouët-Boigny failed to control cocoa prices in the 1980s because new supplying countries (such as Malaysia) made up for the shortfall.
Restricting supply is the one sure way to influence the price. However, this measure must be implemented differently from Houphouët-Boigny’s rash decision in 1987. Together, Ghana and Côte d’Ivoire control 65% of the world cocoa market; they would only need to team up with three other countries (Indonesia, Nigeria and Cameroon) to gain a share large enough to fully control cocoa prices.
However, given the current structure of the sector in both countries, this would be difficult to achieve for two reasons. First, the IMF has already liberalised the marketing system in both countries, so what Houphouët-Boigny did in 1987 would now be almost impossible. The second, and perhaps most important, the reason is that the so-called sustainability programmes organised by multinationals in both countries are in effect productivity programmes, in that they are structured to increase production and supply. Hence, they are inimical to any attempt to control supply.
