Leveraging on rising cocoa prices; farmers must adopt good practices
Ghana’s cocoa sector has been struggling in recent times, with the Ghana Cocoa Board (COCOBOD) recording losses for five consecutive years.
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COCOBOD in January last year defaulted on payments of its 182-day bill, rolling over outstanding securities with face value of GH¢940.42 million.
As a result, the cocoa regulator embarked on a restructuring programme to rein in its GH¢7.9 billion to investors in its cocoa bills.
The objective of the Cocoa Bills exchange was to reduce the excessive burden created by the short-term cocoa bills and put COCOBOD on the path of financial sustainability in line with targets defined by the IMF Staff agreement.
One year after this exercise, COCOBOD has bounced back, recording a profit of GH¢2.3 billion in 2023.
The restructuring of the cocoa bills led to a reduction of the coupon rate from 30 per cent to 12.5 per cent, which has given some huge relief for COCOBOD to operate and make profits.
COCOBOD's financial challenges were brought on by the low cocoa prices on the world market in the last few years which was exacerbated by the onset of COVID-19 and its consequential shutdown of global economies. This heavily compromised COCOBOD's ability to fully redeem the cocoa bills when they matured, leading to rollovers.
With the COVID-19 pandemic now over and COCOBOD’s financial challenges stabilising, the Graphic Business believes it’s time for the country to take advantage of the rising cocoa prices to rake in more revenue.
Cocoa prices have been on the rise on the international market, with a ton now selling between $9000 to $10,000.
The country has, however, failed to take advantage of this increase in prices due to supply challenges which have been compounded by smuggling.
COCOBOD always does forward sales which means that it has started negotiating with buyers for next season’s produce and considering the current price on the international market, it looks likely that COCOBOD will hedge the country’s cocoa at a price which is higher than the current price of $2600 per ton.
What the country therefore needs right now is the cocoa beans to take advantage of the rising prices and this will depend solely on the farmers.
Although the global yield per acre in the cocoa sector is between 2 to 2.5 tons per hectare, Ghana is currently lagging behind as the yield per hectare is not even up to one ton.
A visit to some cocoa farms in the Central and Western regions revealed that a lot of farmers were getting between two to five bags per acre against a possible 15 to 20 bags per acre.
It came to light that the poor cocoa yields were a result of unsustainable farming methods such as the use of weedicides, poor application of fertiliser and other chemicals, lack of pruning and lack of hand pollination.
The Graphic Business therefore joins calls in urging farmers to adopt good farming practices that will ensure higher yields for their crops.
Good farming practices such as pruning and hand pollination help cocoa trees, by enabling them to bear flowers, which is essential for the trees’ survival and fruit production and increases their yields.
An example in the Bompieso District in the Western Region, where farmers were harvesting between 15 to 25 bags per acre solely due to the adoption of pruning and hand pollination, has shown that with such practices, farmers can harvest higher yields.
If the country aims to tap into the high and unprecedented price levels on the international market, it stands to reason that we must increase our yields and shoot beyond the million tons in the coming years.
It will require a policy shift that will ensure that the best form of farming practices are adhered to. It will also require the necessary logistics and support to the farmers that will enhance the overall production of cocoa in the country.
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Ghana needs to take back its pride as the leading cocoa exporter, a position we have lost to neighbouring Cote D” Ivoire.