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Opinions of Wednesday, 10 October 2018

Columnist: Danso Abiam

Liberalize Ghana's cocoa sector

The Centre For Agro Liberty (CAL), at the Institute for Liberty and Policy Innovation (ILAPI), a free market and public policy research organization in Tema, is calling on the government to liberalize the cocoa purchase and export.

We need to emancipate cocoa farmers from the long-standing policy of government-controlled institution that fixes the price for cocoa in Ghana, because this gives the farmers no choices of whom to sell to on price bargain.

It is time cocoa farmers priced their own cocoa, formed associations and exported their produce for dividends.

Government says the price-fixing is to protect farmers from the volatile prices on the world market, which the government itself does not have control over. This command economic system gives no room for price competition and a control of what farmers produce, regarding sales and exports. Why is government not fixing the prices of products like plastic chairs from industries, as it does with cocoa?

However, production declined since the mid-1960s, reaching its lowest level in 1983. Although production has increased consistently since the mid-1980s, it is still less than the level attained in the mid-1960s.

The main industry regulator-the Ghana Cocoa Board (COCOBOD)-plays all major roles in linking the smallholder farmers to global markets. And this has become a big challenge in agricultural development across the African continent. The regulator manages all internal prices for cocoa and pretends to provide relevant inputs and other services to the farmers to enhance productivity in a form of free agriculture inputs such as fertilizers.

CAL findings show that, government has, since 2014, not lived up to its promise of making fertilizer readily available to the farmers. Only half of the budgeted quantity of fertilizer in 2014 and 2015 were made available to the farmers, and the situation has not been different since then. CAL has, again, noted with regret that there has not been any official information, explaining what has led to such situations.

Government's interventions have rather ushered cocoa farmers into destitution and are still living way below globally defined poverty levels, which is $2 a day. The lack of a decent livelihood for cocoa farmers contributes greatly to bad labour, human rights' violations, child labour and otherrelated problems in the cocoa supply chain. The future of cocoa is no longer attractive. Thus, the younger generations are largely drifting away from cocoa farming, whilst the life expectancy of the older farmers are also aging away.

Farmers have no control over decision-making, thus, cocoa is largely purchased and sold to the global market through the government.

The unfair distribution of value and power in the cocoa chain also contributes to the root causes of the extreme poverty of cocoa farmers. And again, merging and takeovers have resulted in only a few companies dominating up to 80% of the whole value chain, whereas farmers who suffer to produce the cocoa lack the right to be a part of the decision-making process.

The sad aspect of it all is that, the percentage score of poverty rate among all cocoa growing regions is higher than the non cocoa growing regions, according to a Ghana Statistical Service report. Why must the cocoa farmer be poor when his product has hinge on Ghana's Gross Domestic Product (GDP)?

However, no matter what government regulations maybe, if the price-setting mechanism is not addressed, cocoa farmers will still remain poor. There will be no future cocoa farmers, unless the fundamentals in the cocoa sector changes.

Cocoa farmers all over the country are threatening to halt production if government does not listen to their plights, following its announcement to maintain cocoa producer prices at Gh¢475.00 for the 2018/2019 cocoa season from 1st October, 2018.

The Government of Ghana has disappointed cocoa farmers because they do not understand why the prices of cocoa have been maintained since 2016 to 2019 season. Government has to allow cocoa farmers to price their own produce, like cashew and any other cash crops.
COCOBOD should be the tax regulator instead of it controlling and fixing the purchasing price of the crop.

Centre for Agro Liberty (CAL) is, therefore, giving government a one-month ultimatum to address these concerns, or will lead a nationwide demonstration, and cocoa farmers nationwide will cease selling their cocoa to the government.

Long live Ghana!
Long live the Ghanaian Cocoa Farmer!
Long live CAL!