ARE COCOA FARMERS PAID THE WHOLE US$ 400/MT LID LEVY AS PROMISED?

In the year 2020, Ghana and Ivory Coast were able to secure a $400 per metric ton of cocoa beans as a living income differential levy to be paid by any buyers of Cocoa beans from the two West African countries. With Ghana’s positive optimism of buyers paying the LID in perpetuity, they decided to add this extra income to the producer price for the 2020/21 crop year. This crop year, 2021/2022, Ghana Cocoa Board (Cocobod) announced its decision to maintain the producer price, praising itself as being able to maintain the price without any increase, yet higher than that of Ivory Coast. In this article, I would highlight how Cocobod is likely to pay less than the forex value of the LID to cocoa farmers for the 2021/2022 crop year. I will make a recommendation for all of us and interested stakeholders that care about Cocoa farmers’ livelihoods, to keep an eye on the US$ exchange rate for the crop year and pressure Cocobod to pay smallholder cocoa farmers their LID levy arrears.

IS Cocobod paying the Entire $400 LID levy to Cocoa Farmers?

Cocoa is purchased in Ghana Cedi (GH¢) from smallholder cocoa farmers by Licensed Buying Companies (buying agents for Cocobod) and sold in United States Dollars (US$). This makes the exchange rate an important variable to consider when it comes to what cocoa farmers are supposed to receive in “Ghana Cedi”. Whereas a “fixed producer price” (in Ghana Cedi) is announced at the beginning of each annual farming season, the exchange rate of USD to GH¢ in terms of sales is determined by the “demand and supply dynamics” of the forex.

2020/2021 Crop Year

When the Ghana government secured the “$400”/mt Living income Differential levy (LID), it announced that the entire 100% of the money will be given to farmers. Ghana’s government decided to add the US$400 LID in its cedi equivalent to the