Structural Challenges affecting revenue management in cocoa sector-IMANI

In Ghana, the cocoa sector is one of the most important sectors that contribute to the country’s economy in terms of export revenue and also serves as a direct provision of income for many people in the country.

Despite the importance of the sector, there are structural challenges requiring the attention of all stakeholders such as lmited output, poverty of farmers, environmental sustainability, financial sustainability, role of various actors and impact on production.

These challenges are cited in the recent launch of Imani Centre for Policy and Education report on ‘revenue management and price setting mechanism’ on the sector.

According to the report by policy think tank, IMANI Africa suggests that, a high percentage of farmers in the country’s cocoa industry believe that, Ghana Cocoa Board (COCOBOD), government mandated institution that oversees the sector does not serve their interest.

The report which was launched in Accra was conducted on the theme: “Exploring the revenue management and producer pricing mechanism within Ghana’s Cocoa sector”.

Per the report, majority of cocoa farmers are not satisfied with the current cocoa producer price which is part of the responsibilities of the cocoa agency.

Therefore aims among others, to examine the connection between cocoa prices and production in Ghana as well as to understand the current cocoa pricing mechanisms though farmers place much importance on the role COCOBOD plays as a regulator in the industry.

“It is equally important to note that, regardless of the sentiments expressed by the farmers regarding the protection of their interest by COCOBOD, they are equally of the view that, COCOBOD plays a significant role in the industry, and will want the regulator to continue in this capacity” the report pointed out.

Meanwhile, COCOBOD has over the years been the agency responsible for fixing the cocoa buying price in Ghana which is intended to protect farmers from the volatile prices on the world market.

Speaking at the report launch, Mr Carl Duho, Research Consultant at IMANI noted that, cocoa contributes hugely to the country’s employment, with more than 800,000 cocoa farmers engaged in the sector and over 700 employees of COCOBOD and its subsidiaries.

Indicating that, the sector also contributes to export earnings for the economy, and the funds that comes are key sources of liquidity support for the Bank of Ghana, contributing to poverty reduction.

The report is in effect of recent strategies by the governments of Ghana and Côte d’Ivoire to determine a common price floor for the 2021 season and the associated Living Income Differential of US$400/tonne aimed at exacting value generators, hence farmers in the two countries, demands a comprehensive assessment of the challenges confronting the sector, crucially on revenue management, and price setting mechanism.

However, the report from the Policy group asserts that “Results from the farmers’ survey revealed that 94 percent of farmers are dissatisfied with the current producer price, whilst 70 percent indicates that, they ain’t aware of COCOBOD with 70 percent believing that COCOBOD does not serve their interest.”

Further revealed that, only 20 per cent of farmers had knowledge about the producer price setting mechanism whilst about 88 per cent of them believed they did not have fair representation on the Producer Price Review Committee (PPRC), with about five per cent acknowledging that, they have been paid a producer price lower than the announced producer price, as well about 94 per cent were not satisfied with the current producer price.

On the way forward, Mr. Carl Duho called for the level of transparency on the price setting mechanism to be increased adding; “The PPRC should also help in providing clarity and explanations to pricing decisions and policies should aim at diversifying the income sources of cocoa farmers in order to enhance their overall welfare.”

“The operational strategy of COCOBOD needs to be improved along the lines of efficiency and effectiveness over the medium term to ensure that, current plans by management are followed through to the latter that, the institution should work towards breaking even in the medium term”, he stressed.

In order to change the perception of farmers about the industry regulator, IMANI Africa suggested that “there is a need for more farmer engagement on policy decision making and implementation.”

Therefore advised Government to direct policies at “increasing the compensation that farmers receive as well to sustain production in the sector, youth involvement in cocoa cultivation must improve, as well as productivity enhancing mechanisms through technology.

Source: Ishmael Barfi

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