The NDC MPs want the government to raise the price of a bag of cocoa beans from the current 666 cedis to 1000 cedis.
Actually, the uncertainty is becoming really concerning but, allow me to add that given these uncertainties, the government should not declare a price lower than GHC16,000 per metric tonne, or a thousand cedis every bag.
A new cocoa farmgate price for the 2022–2023 crop season, which started on October 1, 2022, was not disclosed by the Ghanaian government.
The Ghana Civil-Society Cocoa Platform (GCCP), an independent campaign and advocacy platform for civil society actors in the cocoa sector wants Ghana Cocoa Board (COCOBOD) to announce an increase in the Producer Price of Cocoa to ¢838 from the current ¢660 a bag for the 2022/2023 crop season.
But addressing the media in parliament minority spokesperson on finance, Dr. Cassiel Ato Forson revealed Ghanaian cocoa farmers are smuggling their produce to Ivory Coast where prices are high as a result of the delay in announcing the new prices.
The former deputy finance minister argued payment of premium price to farmers is non-negotiable if the smuggling is to stop.
“It will surprise you that on Friday, 30th September 2022, our neighbouring country, Ivory Coast announced a price of 900 CFA franc which is equivalent to GHC852 per bag or GHC13,632 per metric tonne. Eventhough their currency is not depreciating at this rate as we have observed in Ghana. Let me caution that if this government fails to raise the Cocoa prices it could trigger massive smuggling, particularly at a time when we need every single dollar.”
“Today, one thing that this country needs most foreign Exchange, the dollar, and so we cannot afford to allow our cocoa to leave the borders of our country. And we can only do that if indeed we preserve the farmgate price by giving the farmers a good price.”
The Akufo-Addo administration should at the very least pay cocoa farmers remunerative cocoa prices, according to the minority in parliament given the country’s tremendous inflation and misery.
Because, in their opinion, cocoa growers are suffering from extreme hardship, the opposition members accused the administration of being callous.
In a press statement issued by Ranking Member on the Finance Committee of Parliament, Dr Cassiel Ato Forson, reacting to the 1.13bn Syndicated loan agreement signed y the Ghana Cocoa Board and the Ministry of Finance, the Minority said the international price of cocoa has appreciated slightly, above the previous year levels, so this Government should not, in this dire economic situation remain insensitive to the plight of cocoa farmers, stakeholders and Ghanaians in general.
“We wish to assure our hard-working cocoa farmers, that a future NDC government will not short-change them, and only wait to increase cocoa prices in an election year as we saw in 2020 and which they appear to be planning to repeat,” the statements aid.
Below is the full statement…
Farmers and stakeholders are running out of patience for COCOBOD. Every year cocoa prices are announced at the opening of the season. 1st October is internationally recognised as the start of the cocoa season worldwide as affirmed by the UN body for cocoa, the International Cocoa Organisation — ICCO.
2. This year COCOBOD opened the cocoa season without a producer price for cocoa. After wasting scarce resources to organise a cocoa day that,was poorly attended, farmers and stakeholders in the cocoa industry are left in suspense about the price.
3. We wish to send a loud and clear message to this government; cocoa farmers are fed up and demand their cocoa price now.
4. After all this uncertainty, government should not announce any price below GHS 1000 per bag, or GHS16,000 per tonne. Ghanaians are all witnesses to the historic depreciation of the Cedi. In 2021, COCOBOD used an exchange rate of GHS 6 to the $1. We wish to
remind them that the dollar is now more than 10. Even at the dollar equivalent price, famers and all stakeholders including LBCs and Haulers should receive higher prices and margins this year.
5. On Friday 30th September 2022, Ivory Coast announced a price of 900 CFA which is equivalent o GHS852 per bag or GHS13,632 per tonne. If this government fails to raise cocoa prices, it could trigger massive smuggling, particularly at a time when we need every single dollar
6. With significant volumes of cocoa purchased in October, the Ivorian price now leading Ghana by a whopping GHS192, Ghana could be losing cocoa to smuggling as a result of the needless delay in announcing the producer price.
7. Considering extreme inflation and hardship in the country, the least this insensitive government can do is to pay cocoa farmers remunerative cocoa prices.
8. In addition, the international price of cocoa has appreciated slightly, above the previous year levels, so this Government should not, in this dire economic situation remain insensitive to the plight of cocoa farmers, stakeholders and Ghanaians in general.
9. We wish to assure our hard-working cocoa farmers, that a future NDC government will not short-change them, and only wait to increase cocoa prices in an election year as we saw in 2020 and which they appear to be planning to repeat.
Very late and very little: 2022 syndicated loan
10. The Syndicated loan was signed on 3rd October 2022, for the first time in 30-years. The Syndicated Loan is typically signed
before October so that the draw down is timed to the start of the season. However, this government has added late signing of syndicated loans to its plethora of failures.
11. Parliament approved up to $1.3 billion syndicated loan. However, COCOBOD could only get $1.13bn. This is purely due to the lack of confidence in the Ghanaian economy resulting from the generally agreed incompetence and gross mismanagement of the
Ghanaian economy.
12. With huge and unprecedented debt overhang at COCOBOD, will the syndicated loan go into purchase of cocoa and related operations? Or will LBCs suffer the same faith of borrowing very expensive loans to buy cocoa from farmers, only for COCOBOD
not to pay them, as we have seen since 2017?
13. During the just ended season, COCOBOD took a loan of $1.3billion to buy 850 tonnes of cocoa. Actual production is about 700,000, the lowest production in more than 10 years. Another unprecedented failure. Yet LBCs complain that COCOBOD is still owing them for cocoa delivered. Where is the money?
14. This Government is collapsing the cocoa sector as it has done to every other sector. They must be reminded that Cocoa is the backbone of the Ghanaian economy. Ghanaians are saying enough of the mismanagement.
15. The NDC Caucus in Parliament demands an urgent intervention from the President on the policy alternatives we have provided in this statement so our suffocating cocoa sector would be salvaged.
According to a statement made by Dr. Cassiel Ato Forson, ranking member of the finance committee, this is due to what they view to be the widely acknowledged incompetence and egregious mismanagement of the Ghanaian economy.
“The Syndicated loan was signed on 3rd October 2022, for the first time in 30-years. The Syndicated Loan is typically signed before October so that the draw down is timed to the start of the season. However, this government has added late signing of syndicated loans to its plethora of failures.
“Parliament approved up to $1.3 billion syndicated loan. However, COCOBOD could only get $1.13bn. This is purely due to the lack of confidence in the Ghanaian economy resulting from the generally agreed incompetence and gross mismanagement of the
Ghanaian economy.
“With huge and unprecedented debt overhang at COCOBOD, will the syndicated loan go into purchase of cocoa and related operations? Or will LBCs suffer the same faith of borrowing very expensive loans to buy cocoa from farmers, only for COCOBOD
not to pay them, as we have seen since 2017?” the statement said.
The Ghana Cocoa Board (COCOBOD) has signed a USD1.13 billion Receivables-Backed Trade Finance Facility (Syndicated Loan) on Monday October 3.
COCOBOD received $1.13 billion instead of the $1.3 billion as approved by Parliament.
The Chief Executive of COCOBOD, Joseph Boahen Aidoo, said during the signing ceremony that despite the challenges facing the cocoa sector, brought on by the global financial difficulties, the sector has once again shown leadership.
He assured the lenders of the effective and efficient use of the funds.
The Minister for Finance, Ken Ofori-Atta, also said the signing puts the nation’s finances in the right landing zone and gives impetus for optimism in the Ghanaian economy.
Dr Cassiel Ato Forson has expressed concern over government’s intention to reach an agreement with the International Monetary Fund before the 2023 budget is prepared in November.
According to him, government may find it difficult to achieve the timeline as it’s targeting $3 billion under an economic support programme from the Fund.
Speaking with Accra-based Citi FM, the Minority spokesperson on Finance opined, “I doubt in the next six weeks we are going to have a programme. That will be a magic of a lifetime.”
He further argued that should a deal be secured before the budget is presented, it may not be in the interest of the Ghanaian populace.
“It will mean we are just going to be yes men and accept everything they say,” Ato Forson stressed.
Director of Operations at Dalex Finance, Joe Jackson, on his part said government must be given the benefit of the doubt over its timeline to secure an IMF deal.
He however cautioned that although the targets are ambiguous, the Government of Ghana and the IMF are operating in unison and urgency to secure a deal which is critically needed to sustain the Ghanaian economy.
“Unless somebody shows me any reason that the team is not going to work day and night to achieve that target, I will be cautiously optimistic,” Joe Jackson pointed out.
Meanwhile, finance minister Ken Ofori-Atta has outlined seven pillars which will be hinged on Ghana’s possible economic support programme from the International Monetary Fund.
These include; i. Debt Sustainability; ii. Fiscal Consolidation; iii. Strengthening Monetary and Exchange Rate Policies iv. Building Strong Financial Institutions; v. Macro-Critical Structural Reforms; vi. Maintaining Peace and Security; and vii. Economic Growth and Transformation.
Ghana is currently holding negotiations with officials from the Fund who arrived in Accra-Ghana on September 26 with talks expected to cover a 10-day period.
The Former Deputy Finance Minister noted that the country’s debt position has been tolerated long overdue such that it is now unsustainable.
Speaking on Top Story, Monday, the Ajumako Enyan Esiam MP said the debt restructuring situation presents dire consequences to the economy as the country has never experienced any debt restructuring of the sort.
“Our debt position has been tolerated. I can tell you that we cannot avoid debt restructuring…if Ghana does not go through debt restructuring, I may not even continue as a Member of the Finance Committee. Our debt is simply unsustainable…the entire envelope of government bond is going to go through some form of haircut,” he told Evans Mensah.
The MP is also worried as he believes the country “has no expertise” to do a debt restructuring.
According to Dr. Ato Forson, the government has poorly handled the communications surrounding its decision to debt restructure.
He contended that the unwavering impact of such a decision on the country’s economy needed the IMF to make such an announcement after its debt sustainability analysis.
“The communication around this matter has been extremely poor. Our country is in trouble because of the people who are in charge. The level of ineptitude is just too much, the way they handle issues is just unacceptable. The communication around this has been poorly done. It should have been the IMF after doing debt sustainability analysis that they will find a better way to announce it and get it done properly…the strategy has failed and it is going to cost this country a lot more,” he added.
Meanwhile, the International Monetary Fund (IMF) has announced that its economic programme with Ghana will focus heavily on debt sustainability.
This was captured in a Question and Answer statement issued by the IMF as it begins deliberations with the Government of Ghana on an Economic Programme aimed at stabilising Ghana’s economy.
The IMF also added that the programme will support the credibility of government policies, restore confidence in the central bank’s ability to manage inflation and accumulate foreign exchange reserves to help the local currency withstand headwinds.
The Ranking Member on the Roads and Transport Committee of Parliament, Governs Agbodza has bemoaned what he calls the duplication of projects and funding captured in the $750 million loan agreement before Parliament.
According to him, funding for infrastructure for the All African Games and rolling stock for the railway sector have already been approved by the house and as such, there is no need for them to be captured in the latest loan agreement.
He also contends that funding for the Suame interchange is captured twice in the loan agreement.
“We have noticed some projects being duplicated in the agreement. We do not believe this is right and we will not encourage it. We want some clarifications. The real problem in the Eastern corridor is the Oti-Damongo session, which the Chinese have failed to deliver, and we are encouraging the Minister for Roads and Highways to terminate the contract and reward it.â€
“If we have any resources, we should be setting aside some money for the new contractor to complete the session… We believe that the breakdown is not satisfactory. We are not necessarily opposed to the $750 million. We only want to get things clearer. The information we have gathered so far is too limited.â€
Parliament is currently debating the loan agreement with the Afrexim Bank for funding infrastructure projects and budget support.
The loan is part of a $1 billion dollar the government is seeking to shore up its reserves as well as to pay for several infrastructure projects across the country.