Ghana to increase cocoa farmgate price by 5.2% amid strong sales prospects

GHANA – Ghana is set to raise cocoa farmgate prices by 5.2% for the 2019/20 season, the first increase in four years, supported by strong sales of export contracts to chocolate makers and cocoa houses.

The farmgate price will rise to US$1,523.81 (GH¢8,000) per tonne for the season starting in October from US$1404.33 (GH¢7,600) per tonne last season.

The price has been unchanged for the past three seasons in Ghana, the world’s second-biggest cocoa producer. Ivory Coast, the biggest producer, will also raise its farmgate price.

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“The price will be around GH¢8,000 per tonne next season. That’ll be GH¢500 (US$92.39) per bag, and it’s something that cocoa farmers deserve,” a Cocoa Marketing Company (CMC) source told Reuters.

The move comes after Ghana and Ivory Coast joined forces in June to impose a floor price for cocoa of US$2,600 per tonne and a living income differential (LID) of US$400 per tonne.

Ghana and Ivory Coast have also been in talks for two years about simultaneously announcing their farmgate prices.

Ghana’s Producer Price Review Committee, which sets the farmgate price, meets annually in September to decide a price, and the official announcement is made in early October before the cocoa season starts.

“Inflation and interest rates are now low in Ghana at the moment, and aside from the election (in December 2020), another possible reason for a hike would be the positive gains cocoa made this year,” Cocoa Board (COCOBOD) said.

The COCOBOD is set to sign its annual cocoa loan syndication deal with some 20 French banks in September 2019 to borrow up to US$1.5 billion to aid cocoa purchases for the 2019/2020 crop season.

This is after the Ghanaian parliament approved the transaction. However, it is likely that COCOBOD may not take up the entire amount that it has been given the approval to raise from the market.

The annual loan deal is the largest pre-export soft commodity financing facility in sub-Saharan Africa.

Joy Business reports that some US$300 million have already been secured through a medium-term facility from some of the 20 commercial banks that would be supporting COCOBOD’s syndication facility.

A US$650 million facility from the African Development Bank is expected to support COCOBOD’s operations. Sources say this would enable COCOBOD to meet its financial needs for the 2019/2020 crop season.

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