Agribusiness: Good news and market realism
Prices paid to cocoa farmers are increasing while production of staples like sorghum and rice are growing steadily
After presiding over a year of stringent belt-tightening, Finance Minister Kwabena Duffuor had some good news for the roughly 720,000 cocoa farmers who make Ghana the world’s second-biggest producer after Côte d’Ivoire and provide the country’s biggest export revenue after gold of some $1.2bn a year. “The government has increased the producer price of cocoa from 2,208 cedis per tonne to 2,400 ($1,675) per tonne, which is 72.16% of the net [export] price,” Duffour announced on 7 January.
In January, cocoa beans were trading at around $3,300 per tonne in New York; that is up more than $500 from January 2008. Buoyed by this boom, President John Evans Atta Mills’s government is keeping to its predecessor’s target of pushing Ghana’s cocoa production up to a million tonnes a year and processing about 40% of that total locally.
Two companies, jointly owned by the state and private investors, have dominated cocoa processing efforts: the Cocoa Processing Company (CPC), with a capacity of some 50,000 tonnes a year and the West African Mills Company with a capacity of around 80,000.
Recently, three big international firms have moved into the Ghanaian cocoa sector: Barry Callebaut (60,000 tonnes) and Cargill (60,000), with Archer Daniels Midland due to set up a factory in Kumasi, the capital of Asante region.
Despite providing Ghana’s second-biggest source of foreign exchange, cocoa farmers earn an average of less than a dollar a day from the crop and have to supplement their incomes with other work. According to a new report by the University of Ghana at Legon*, the share going to cocoa farmers of an average bar of chocolate selling in Britain is just 4%.
Development economist and leading member of the Nkrumahist Convention People’s Party, Kweku Osafo, argues that the concentration on cocoa is misplaced: “We are spending about $800m a year on importing rice and sugar; we have to do more to step up local production of these basic commodities.” The Mills government claims some success in local food production. It has restored import taxes on rice and poultry. Latest estimates show that in 2009 rice production went up by 29%, maize by 5% and sorghum and millet by 20%. It is sending packages of subsidised fertiliser, protective clothing, seeds and money for land preparation to some 50,000 farmers.
Companies to watch
COCOBOD?: The state-owned body has been trying
to penetrate the Asian market for chocolate, trading
on Ghana’s high- quality cocoa beans??n
GHANSA?: A new venture by South African farmers
in the Volta region, working in small-scale livestock
and grain production??n
UNILEVER: ?Owns the Benso and Twifo oil plantations,
which constitute a large part of Ghana’s palm oil production
A new rice-sector support project in the impoverished three northern regions of Ghana is set to produce 500,000 tonnes. Under the Savannah Accelerated Development Authority, 10,000 jobs are to be created to produce sugar cane for ethanol to be exported to Sweden.
It plans a 10,000 tonnes/year shea nut plant in Central Gonja district, with the processed butter guaranteed a market in Brazil. Other Brazilian projects include a jute-sack factory – vital for the export of cocoa – and the processing of groundnuts into cooking oil.
South Africa’s GHANSA Investments Ltd plans to invest $300m in poultry, catfish, maize and sorghum production. Some 700 South African farmers are to establish a 30,000 hectare farm in the South Tongu district of the Volta region which should create about 1,000 local jobs.
??*’Mapping sustainable production in Ghana cocoa’ by the University of Legon, Ghana and the Institute of Development Studies, University of Sussex, 2009.