Ghana is ruling out plans to cut the pay of cocoa farmers despite suffering reduced earnings due to fall in global cocoa price.
Speaking in a broadcast on Citi FM on Tuesday, Agriculture Minister Owusu Afriyie explained that in making the decision, the government considered the financial standing of the farmers, who were also highly instrumental to President Kuffor garnering winning votes that brought him into power.
“We can’t go to the poor farmers to say we are cutting prices,” he said. However, the compensation will reflect a decline in global prices.
The change in plan comes after the agriculture ministry previously announced in January that Ghana cannot continue to subsidize cocoa farmers’ pay to maintain the level they were before prices slumped more than 25 percent.
The Ghanaian government had been faced with little choice but to end subsidizing the prices it pays to 800,000 cocoa farmers; a support that will likely cost almost $450 million this season as the Western nation currently pays equivalent of 7,600 cedis ($1,720) per metric ton. Farmers were disappointed with the prospect of the government going back on its promises, despite the slump in international prices since the middle of 2016.
Pulling the plug on the decision to keep paying farmers, however, will delay the world’s second-biggest producer in closing pricing gap with neighboring Ivory Coast (the biggest producer), leading to cross-border smuggling of cocoa beans.
Ghana Cocoa Board in February noted that it has been losing an estimate of $600 for every purchased metric ton of the 850,000 tons this season until September.