The 2 Direct Causes of the Cocoa Sector Crisis

As Hon. Kojo Oppong Nkrumah, Hon. Michael Aidoo, Mr. Dennis Miracles Aboagye and others have elucidated, Trading errors made by this Government is the main reason for the current COCOBOD crisis.

As late as last September when the Government reneged on its promise to pay the farmers at least 6,000ghc per bag, and pegged the farmgate price at about 3,600ghc per Bag of Cocoa, it had the opportunity to forward-sell as advised by the previous NPP Government, a tonnage of cocoa at about $7,000, and farmers would not have had to endure the current hardship at all. 

Deliberately deciding to rather do more spot sales, prices have sunk now to around $3,600 per tonne. This is governmental incompetence, which must never be shifted unto farmers. 

Another leg of the immediate cause of the cocoa economics crisis - artificial depreciation of the Dollar, is based on Government policy decisions, for which Cocoa Farmers must not be made to suffer.

Farmers had no say in the installation of inexperienced leadership at COCOBOD and pumping our precious money into artificially lowering the dollar exchange rate, also known as Dollaromics.

With respect to the AI Dollaromics, it is partially responsible for the crisis because the earned Dollars to pay the farmers with, has been artificially depreciated (reduced in Cedi equivalent) by about 30%, through Government interventions in the forex market.

NDC's Covenant with Cocoa Farmers/Voters

The NDC made a covenant with Cocoa Farmers to win their votes massively in 2024, that was not dependent on the world market price of cocoa.

Also, cocoa farmgate prices paid to farmers has never before been reduced in this country. And the NDC made no such an intention known to voters/farmers when they sought their votes in 2024.

Rather, the NDC promised doubling what was being paid farmers, describing the then NPP Government as wickedly cheating them and paying them much less than what was due them.

*COCOBOD Books or Discontinuation of Cocoa Syndicated Loans cannot be used as Excuse*

This Government's resort to the point that COCOBOD had a negative equity (assets - liabilities) of close to 4 billion ghc, as left behind by the last NPP Government, plus, a supposed inability of the previous Government to go for a syndicated loan, are Red Herrings, and cannot justify the head cut and hardship being meted out to the farmers.

The previous Government and the IMF already had a framework to restructure and move about 21b out of about 33b ghc COCOBOD Liabilities (most of which were Cocoa Road legacy debts). When that restructuring was completed, COCOBOD’s equity is fully back on track, in positive territory.

As for syndicated loans, the previous successful banner season (2024/2025) was achieved without it, so, it has no bearing on the crisis. Rather unprecedented gains and savings were made last season, which this Government worked hard to try to take credit for, beforehand. 

*New Pricing Regime likely to hurt Cocoa Farmers further*

The Government's plans to pass a new COCOBOD Act that will peg what is paid farmers, at 70% of the world market price, is another break of covenant with farmers, since it is likely to further reduce what they are paid. Meanwhile, the NDC never told the farmers this was their intentions, going into the 2024 elections. 

Conclusion

In conclusion, this Government made a covenant with Cocoa Farmers during the 2024 Elections, promising them the moon to win their votes massively, even though the NPP had done so well for these farmers. 

This Government, which has seen it fit to use our windfall gains from Gold to artificially depreciate the Dollar and subsidise importation, but refuses to honour its covenant made with Cocoa Farmers/Voters, and subsidise them such as the last NPP Government did, indeed, has totally scammed them. 

To add insult to injury, the Government is totally responsible for both direct causes of the crisis - poor Trading decisions and the artificial aggressive depreciation of the Dollar using the country’s limited resources.

Ghanaians should brace ourselves for more cases of economic side effects such as the Cocoa crisis, as a result of misguided Government decisions.

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