(Writes through with details and quotes)
By Kwasi Kpodo
ACCRA, Oct 13 (Reuters) – Ghana will keep the price it pays cocoa farmers unchanged for the 2017/18 season, the agriculture minister said on Friday, opening a price gap with neighbouring Ivory Coast that is expected to fuel smuggling.
World cocoa prices have plummeted since last year due to bumper crops in top producer countries. Ivory Coast, the world’s top producer, slashed its farmer price by more than a third halfway through the last season.
Ghana, the second-biggest grower, did not lower its price of 7,600 cedis ($1,735) per tonne, however, and Owusu Afriyie Akoto said it will be maintained into the new season, which opened on Friday.
“Ghana has a special place for its farmers for the role they have played in so many years, and that is the reason the government will go at length to sacrifice to ensure that they are not short changed,” he told reporters in the capital Accra.
Ghana has decided to forego some export duties on cocoa in order to keep the price unchanged.
“Other stakeholders have also taken a cut in their margins so we could maintain the price for farmers,” Akoto said.
Ghana is targeting output of around 850,000 tonnes this season.
“It is going to be very expensive for Cocobod because they haven’t sold forward at this price so they will have to compensate with the stabilisation fund. I hope they did the maths but we will see,” said one London-based cocoa trader.
Cocoa regulator Cocobod has secured a $1.3 billion syndicated loan to cover purchases.
“We believe what we took for now will be enough to buy the main crop,” William Mensah, deputy CEO of Cocobod, told Reuters, adding that the regulator had the option of seeking an additional $200 million for the light crop.
Ivory Coast, which bases its farmer price on the average price its cocoa garners in forward sales, set its farmer price at 700 CFA francs ($1.27) per kilogram, or $1,270 per tonne, earlier this month.
Exporters and traders estimated around 80,000 to 100,000 tonnes of beans were smuggled out of Ivory Coast, mainly into Ghana, after Ivorian cocoa authorities lowered the farmer price at the start of the April-to-September mid-crop harvest.
“It could easily double that for this year because you will have the full main crop to be tempted to cross your cocoa into Ghana. They can strengthen control at the border and slow it down but they cannot prevent it,” the London trader said.
($1 = 4.3790 cedis)
$1 = 551.0000 CFA francs Additional reporting by Nigel Hunt in London; Writing by Joe Bavier; Editing by Jason Neely and David Evans
Reuters: Ghana News