Ghanaian Finance Minister Ken Ofori-Atta said the country can’t keep pay for cocoa farmers unchanged indefinitely as a slump in international prices is weighing on the finances of the world’s second-biggest grower of the beans.
Ghana is scheduled to start purchases for the larger of the two annual cocoa crops on Friday. President Nana Akufo-Addo vowed earlier this month that the country will keep producer payments for the harvest unchanged at 7,600 cedis ($1,731) per metric ton and protect farmers against the past year’s 30 percent collapse in futures-contract prices.
“We’re gradually getting very challenged,” Ofori-Atta said Wednesday in an interview at an Institute of International Finance conference in Washington. “We have to decide on whether we are going to have to subsidize, or whether we are going to have to make a decision on reducing the producer price, which is very difficult.”
The finance ministry and cocoa regulator will hold talks about the issue before Ofori-Atta’s presentation of the 2018 national budget in November, he said.
Ghana and neighboring Ivory Coast, the biggest producer, are joining efforts to market cocoa better and improve benefits for farmers, Akufo-Addo said last month. The countries accounted for more than 60 percent of cocoa output in 2015 and earned the equivalent of 5.5 percent of a value chain that was worth more than $100 billion, he said.
“I don’t think it’s sustainable,” said Ofori-Atta. “We need to begin to look at that.”
Ghana agreed last month to a $1.3 billion syndicated loan for purchases in the next harvest through September, compared with a similar facility of $1.8 billion for the past year. The country is in the third year of an extended credit-facility program with the International Monetary Fund and agreed to bring spending under control after repeatedly missing budget-deficit targets.