The current crisis in the cocoa sector compels the government to urgently introduce reforms in the entire cocoa value chain.
Government will introduce an automatic price mechanism that pays cocoa farmers 70% of the international market price at prevailing exchange rates.
President John Dramani Mahama disclosed this on Monday at the Presidential Dialogue with the Private Sector in Accra.
“Reforms will include, amongst others, domestic funding for cocoa purchasing, expanded involvement of local licensed buying companies in cocoa purchasing, including the revamp of the Produce Buying Company, expand value addition and processing of cocoa and other tree crops locally, automatic price mechanism that pays the farmer 70% of the international market price at prevailing exchange rates,” he stated.
He announced that the reforms will also include a drastic reduction of expenditure and elimination of waste at the Ghana Cocoa Board, as well as retooling of the Cocoa Processing Company.
The President explained that wild fluctuations in the world cocoa market price have recently compelled the government to take emergency steps to cushion the cocoa industry and protect farmers.
He noted that measures have included a painful downward review of the domestic producer price to reflect market realities.
President Mahama emphasized that Ghana must move from being a raw commodity exporter to a value-added producer, stating that the same principle applies to the extractive industry.
The automatic price mechanism represents a departure from the current system where producer prices are set administratively and adjusted periodically, often lagging behind changes in international market prices.
Under the new system, farmers will automatically receive 70% of the international price, providing more transparent and responsive pricing that reflects global market movements.
The President announced that domestic funding will be used for cocoa purchasing, moving away from dependence on external financing models that have proven unsustainable.
He disclosed that licensed buying companies, including the state-owned Produce Buying Company, will have expanded involvement in cocoa purchasing operations.
The revamp of the Produce Buying Company is expected to restore the institution’s capacity to compete effectively in the cocoa purchasing market alongside private licensed buying companies.
President Mahama stated that value addition and processing of cocoa and other tree crops locally will be expanded to ensure Ghana retains more value from its agricultural commodities.
The reforms also target waste and expenditure at COCOBOD, with the President pledging drastic reductions in operational costs to improve the financial sustainability of the cocoa sector.
The Cocoa Processing Company will be retooled to increase its capacity to process cocoa beans locally, contributing to the government’s value addition agenda.
The announcements come as the cocoa sector faces challenges including declining production, financial constraints at COCOBOD, and volatility in international cocoa prices.
Richard Aniagyei, ISD
