Ghana’s Finance Minister Dr Kwabena Duffuor today announced the new cocoa producer price for the 2009-10 season. Farmers will receive GH¢2,208 ($1,511) per ton or GH¢138 ($94.50) per bag of cocoa. That’s a 35 percent increase over last year’s producer prices and about 71 percent of the FOB price of cocoa. With the current cocoa prices hovering around $3,300 per ton, I’m not sure how the 71 percent number was calculated. But the report indicated that the new price is the highest price ever paid to farmers.
If the higher producer price is good news for Ghanaian cocoa farmers, the second announcement was even more important–the creation of a social security fund for cocoa farmers. Starting with the 2009-10 cocoa season, the government will collect GH¢21.43 (about $14.67) per ton to pay for the fund. The fund is an important first step towards helping an aging population of cocoa farmers face a future when the will no longer be able to work on their farms.
Finally, the minister directed to Cocoa Board to pay bonuses for the past year to cocoa farmers no later than December 2009. Altogether a good day for Ghanaian cocoa farmers.
For those not quite familiar with the Ghanaian system, here’s a quick run down. When the wave of IMF demanded liberalization swept over the cocoa producing countries of West Africa, Ghana was a bit of a hold out. The government liberalized the cocoa buying operations, so that cocoa buyers competed with each other. But it retained the Cocoa Board as the sole exporter of cocoa from the country. In addition, the cocoa board sets the producer price for each season and determines the margin cocoa buyers may charge. That’s why this announcement is so important.