The IMF explained that the downward adjustment had become necessary because the Ghana Cocoa Board (COCOBOD) was dealing with a funding gap of GHC1billion due to the government’s inability to reduce producer prices paid to cocoa farmers at a time global prices of the crop had been falling.
This was contained in the seventh and eighth review documents under the recently concluded the External Credit Facility (ECF) Programme.
The report indicated that the adjustment was necessary to save COCOBOD from the expanding financing gap.
Even though the government and COCOBOD are putting measures in place to provide temporary relief the IMF said: “more is needed to strengthen COCOBOD’s financial position.”
COCOBOD often announces the producer price that it pays to farmers for the beans during the crop season. The announcement is done mostly in October every year.
That price was last increased by 11.76% in October 2016 to cover the 2016/2017 season. This means a tonne is sold at GHC7,600, translating into GHS5475 per bag of 64 kilograms.
However, in that same period, the price of cocoa on the international market has dropped from an average of $2,500 per tonne in November 2016 before ending that year at $2,287 per tonne according to the International Cocoa Organisation (ICCO).
In 2017, the price of cocoa only started rising in October before falling again to end December at $1,917.68 per tonne, according to the ICCO.
In 2018, ICCO’s data showed that prices strengthened consistently to peak at $2,659.9 per tonne in May before fluctuating throughout the remaining part of the year.
Therefore, maintaining the price at GHC7,600 per tonne at a time the global cocoa price was crashing means that COCOBOD has been accumulating losses, a development the IMF now estimates at GHC1 billion.