Ghana’s 45% increase in cocoa farmgate price could deter smuggling – Kwarteng

GHANA – Ghana’s recent adjustment of the farmgate price for cocoa is seen as a vital measure to curb smuggling and stabilize the industry, according to Karen Kwarteng, Head of Global Market Sales at Stanbic Bank Ghana. 

Speaking in an interview with CNBC Africa, Kwarteng stressed that “getting the price right is crucial” to discourage the illegal trade of cocoa beans to neighboring countries, where farmers can obtain higher payments.

To combat this issue, the Ghanaian government has raised the fixed farmgate price by nearly 45%, from around GH¢33,000 to over GH¢48,000 (approximately US$3,070). 

Kwarteng described this increase as part of a broader strategy aimed at “protecting one of the country’s most vital industries,” which employs a significant portion of the population. 

She explained that the move is not just an economic adjustment, but a direct response to the ongoing smuggling problem, which has hurt Ghana’s cocoa exports and the livelihoods of its farmers.

Kwarteng also highlighted the alignment of the cocoa price adjustment with another critical initiative: the restructuring of US$13 billion of Ghana’s international bonds. 

“The government is working to strengthen both its financial stability and agricultural sector,” she said, adding that the Ghana Cocoa Board (Cocobod) has introduced a new funding model designed to provide farmers with faster access to necessary funds. 

This model includes provisions for interest payments, reflecting the government’s commitment to safeguarding farmers’ financial well-being.

In addition to raising prices and enhancing funding mechanisms, Ghana is collaborating with Ivory Coast, the world’s largest cocoa producer, to harmonize farmgate prices. 

“By working together, we aim to prevent trafficking rings from exploiting price differences between the two countries,“ Kwarteng explained. 

This collaboration is expected to stabilize cocoa production and ensure that the industry, a major economic contributor, remains robust.

Ghana is also progressing with its international debt restructuring efforts. October 9th has been set as the date for issuing new international bonds, offering bondholders the option to either accept a haircut on the principal or adjust coupon interest rates. 

Kwarteng noted that this initiative is part of the country’s broader strategy under the International Monetary Fund’s (IMF) Extended Credit Facility program, designed to secure long-term financial stability.

Sign up to receive our email newsletters with the latest news updates and insights from Africa and the World HERE