Ghana's cocoa farmers turn to smuggling as currency falls
Suhum (Ghana) (AFP) – Ghanaian cocoa farmer Isaac Antwi says he has to smuggle his beans to Ivory Coast to sell them at a decent profit even as international prices for the commodity recently surged.
Issued on: 25/06/2024 -
Suhum (Ghana) (AFP) – Ghanaian cocoa farmer Isaac Antwi says he has to smuggle his beans to Ivory Coast to sell them at a decent profit even as international prices for the commodity recently surged.
Issued on: 25/06/2024 -
Higher production costs and the Ghanaian currency's fall have hurt cocoa farmers
© CRISTINA ALDEHUELA / AFP/File
He is not the only farmer to have turned to illicit trade in the world's number two cocoa producer as the country's currency, the cedi, has fallen sharply and production costs have soared.
"With the cedi losing value every day, selling in Ghana just doesn't cut it," said Antwi, who lives in Suhum, in the Eastern Region, 74 kilometres (46 miles) from the capital, Accra.
"The prices are better across the border, and the stronger currency means I can feed my family and pay off my debts."
Ghana is emerging from one of it worst economic crisis in years after securing a $3 billion credit from the International Monetary Fund and restructuring most of its debt.
But the depreciation of the cedi, which has lost over 20 percent of its value against the dollar this year, has severely impacted the profitability of cocoa farming even as international prices topped $10,000 per tonne in March before receding in recent months.
Production costs have jumped, with fertilisers and other materials needed to farm becoming increasingly expensive.
Poor road networks have also inflated transportation costs, further squeezing farmers' margins.
Cocoa farmers are obliged to sell their produce to the state-run Ghana Cocoa Board or COCOBOD, which fixes prices to help protect farmers from market volatility.
In April, the government increased the cocoa price paid to farmers to $2,188 (33,120 cedi) per tonne, a 58.26 percent hike.
But this has not been enough to offset the rising costs and the lure of higher prices in Ivory Coast and Togo.
"If the government increased the cocoa price to match our neighbours, the smuggling would stop," said another Suhum farmer, Serwaa Adjei. "We need to survive."
Smallholder farmers
Ghana's cocoa sector, which accounts for about 10 percent of the nation's GDP, is heavily reliant on smallholder farmers.
These growers, however, have found themselves in an increasingly precarious situation.
Dennis Nyameke, a veteran farmer from the Western Region, explained the economics behind smuggling.
"A bag of cocoa sells for at least $137 in Ghana, but when we smuggle it to Ivory Coast, we can get close to $152," he said.
"With four children to care for, I can't afford to ignore that difference."
Despite efforts by the state-run COCOBOD to tackle these challenges, farmers say they are still struggling.
Fiifi Boafo, head of public affairs at COCOBOD, acknowledged the impact of smuggling, illegal mining and adverse weather conditions on cocoa production.
He is not the only farmer to have turned to illicit trade in the world's number two cocoa producer as the country's currency, the cedi, has fallen sharply and production costs have soared.
"With the cedi losing value every day, selling in Ghana just doesn't cut it," said Antwi, who lives in Suhum, in the Eastern Region, 74 kilometres (46 miles) from the capital, Accra.
"The prices are better across the border, and the stronger currency means I can feed my family and pay off my debts."
Ghana is emerging from one of it worst economic crisis in years after securing a $3 billion credit from the International Monetary Fund and restructuring most of its debt.
But the depreciation of the cedi, which has lost over 20 percent of its value against the dollar this year, has severely impacted the profitability of cocoa farming even as international prices topped $10,000 per tonne in March before receding in recent months.
Production costs have jumped, with fertilisers and other materials needed to farm becoming increasingly expensive.
Poor road networks have also inflated transportation costs, further squeezing farmers' margins.
Cocoa farmers are obliged to sell their produce to the state-run Ghana Cocoa Board or COCOBOD, which fixes prices to help protect farmers from market volatility.
In April, the government increased the cocoa price paid to farmers to $2,188 (33,120 cedi) per tonne, a 58.26 percent hike.
But this has not been enough to offset the rising costs and the lure of higher prices in Ivory Coast and Togo.
"If the government increased the cocoa price to match our neighbours, the smuggling would stop," said another Suhum farmer, Serwaa Adjei. "We need to survive."
Smallholder farmers
Ghana's cocoa sector, which accounts for about 10 percent of the nation's GDP, is heavily reliant on smallholder farmers.
These growers, however, have found themselves in an increasingly precarious situation.
Dennis Nyameke, a veteran farmer from the Western Region, explained the economics behind smuggling.
"A bag of cocoa sells for at least $137 in Ghana, but when we smuggle it to Ivory Coast, we can get close to $152," he said.
"With four children to care for, I can't afford to ignore that difference."
Despite efforts by the state-run COCOBOD to tackle these challenges, farmers say they are still struggling.
Fiifi Boafo, head of public affairs at COCOBOD, acknowledged the impact of smuggling, illegal mining and adverse weather conditions on cocoa production.
Cocoa cultivation in Ghana and Ecuador
© Gabriela VAZ, Gustavo IZUS / AFP
Illegal mining for gold, known locally as Galamsey, is rife in rural Ghana, impacting water supplies and keeping farmers from land.
"Illegal mining activities are cutting off farmers from their farms and polluting water bodies needed to irrigate cocoa farms," Boafo told AFP.
He said climate change had also impacted cocoa yields.
"We are doing a lot to improve the situation of the farmers. We are motivating cocoa farmers by paying them more for their produce," he said.
"But the economic pressures are immense, and we are fighting a tough battle."
Obed Owusu-Addai, a campaigner at EcoCare Ghana, a group that works for community rights, called for comprehensive reforms.
"The government must take urgent action to stabilise the cedi and support farmers with subsidies and better infrastructure," he said.
"It's not just about higher prices; it's about creating a sustainable environment for our farmers to thrive."
Revenue falls
The cocoa sector, also battling an outbreak of Cocoa Swollen Shoot Virus Disease, has seen a significant decline in production and revenue in recent years.
Ghana has lost harvests from nearly 500,000 hectares of land in recent years, according to COCOBOD, or about 29 percent of Ghana's total cocoa production area of 1.7 million hectares.
Ghana's struggles have global implications.
Industry experts estimate that over 100,000 tonnes of cocoa beans have been smuggled into Ivory Coast from Ghana since last year.
Smuggling, combined with other challenges, led to a $500-million drop in cocoa revenue in the first quarter of 2024, according to recent data released by the Bank of Ghana.
Boafo said Ghana's cocoa production is projected to reach 800,000 tonnes by year-end, reversing the significant losses of recent years.
With over one million people reliant on the cocoa industry in Ghana, the stakes are high.
"We're very optimistic," Boafo said.
© 2024 AFP
Illegal mining for gold, known locally as Galamsey, is rife in rural Ghana, impacting water supplies and keeping farmers from land.
"Illegal mining activities are cutting off farmers from their farms and polluting water bodies needed to irrigate cocoa farms," Boafo told AFP.
He said climate change had also impacted cocoa yields.
"We are doing a lot to improve the situation of the farmers. We are motivating cocoa farmers by paying them more for their produce," he said.
"But the economic pressures are immense, and we are fighting a tough battle."
Obed Owusu-Addai, a campaigner at EcoCare Ghana, a group that works for community rights, called for comprehensive reforms.
"The government must take urgent action to stabilise the cedi and support farmers with subsidies and better infrastructure," he said.
"It's not just about higher prices; it's about creating a sustainable environment for our farmers to thrive."
Revenue falls
The cocoa sector, also battling an outbreak of Cocoa Swollen Shoot Virus Disease, has seen a significant decline in production and revenue in recent years.
Ghana has lost harvests from nearly 500,000 hectares of land in recent years, according to COCOBOD, or about 29 percent of Ghana's total cocoa production area of 1.7 million hectares.
Ghana's struggles have global implications.
Industry experts estimate that over 100,000 tonnes of cocoa beans have been smuggled into Ivory Coast from Ghana since last year.
Smuggling, combined with other challenges, led to a $500-million drop in cocoa revenue in the first quarter of 2024, according to recent data released by the Bank of Ghana.
Boafo said Ghana's cocoa production is projected to reach 800,000 tonnes by year-end, reversing the significant losses of recent years.
With over one million people reliant on the cocoa industry in Ghana, the stakes are high.
"We're very optimistic," Boafo said.
© 2024 AFP
Buena Fe (Ecuador) (AFP) – Julia Avellan had been tempted to quit the cocoa business before prices unexpectedly exploded on the international market this year, bringing historic profits to Ecuador's farmers.
Issued on: 25/06/2024 -
Cocoa prices skyrocketed in March after a poor harvest in West Africa, and remain at record-highs since partially sliding back
But the "golden" cocoa bean has not escaped the attention of criminals in the small South American nation, wracked by gang violence in recent years.
Avellan, 41, walks through her lush plantation in the central Los Rios province, stopping to slice open a reddish cocoa pod, extracting the slimy bean that will be fermented, dried and roasted on its way to becoming chocolate.
Cocoa prices skyrocketed in March after a poor harvest in West Africa, reaching $10,000 per ton in New York. Prices have since dropped back but are still three times higher than last year.
Countries whose governments do not regulate cocoa prices -- such as Ecuador -- have seen some of the best profits.
Avellan said she has sold a quintal (100 pounds, 45 kilograms) of cocoa beans for $420, compared to around $60 before the boom which barely covered her investments and "made you feel like quitting as a cocoa farmer."
A worker prepares fresh cocoa to be stored before fermentation
"Thanks to these prices, we are going to be more sustainable for our family. We will be able to take care of our plants with even more dedication, because now it truly is the golden seed," she told AFP.
Stolen trucks transporting cocoa
But the bounty has also ushered in danger in a country brought to its knees by organized crime, forcing everyone from shrimp farmers to banana growers to fork out millions in extra security.
"These prices are historic, we have never had them," said Ivan Ontaneda, president of the national association of cocoa exporters (Anecacao).
A worker arranges sacks of cocoa using a forklift at the Fumisa plant of fine aroma cocoa exporter Ecokakao in Buena Fe canton, Los Rios province, Ecuador
He said exporters had already spent around $20 million on security last year, and fears are high that cocaine will end up in their shipments.
Los Rios is one of the most violent provinces in Ecuador with a murder rate of 111 per 100,000 inhabitants.
The figure is even higher than in neighboring Guayas state, whose port capital Guayaquil is the main hub for cocaine trafficking to the United States and Europe.
"My colleagues have been kidnapped. Not even eight days ago, a young man was kidnapped. They have stolen cars (trucks loaded with cocoa) from companies," said Avellan.
The threat of crime leads to an "increase in costs" in the cocoa chain, Marco Landivar, manager of a processing plant for the exporter Eco-kakao, told AFP.
"The cargo has to go with private security, all movements to port have double custody," he adds.
More expensive chocolate
After the Ivory Coast and Ghana, Ecuador is the world's third-largest cocoa grower, producing some 420,000 tons a year.
After the Ivory Coast and Ghana, Ecuador is the world's third-largest cocoa grower, producing some 420,000 tons a year
In recent months, unfavorable weather conditions and devastating diseases in aging plantations have battered crops in West Africa, tipping the scale in favor of the Latin American country.
In Ecuador, small farmers produce 80 percent of the country's cocoa beans, while the rest are grown by larger plantations.
The beans, the seed of the fruit of the cocoa tree, are dried under the hot equatorial sun in storage centers before being shipped off to delight chocolate lovers around the world.
In 2023, cocoa generated $1.3 billion for Ecuador. In the first four months of this year alone, the country has sold $774 million worth, according to the central bank.
Ecuador's main markets for cocoa are Indonesia, Malaysia, the United States, the Netherlands and Belgium.
The soaring cocoa price has also led to wild speculation and demand for "much more liquidity, which the export sector does not have at the moment," said Ontaneda.
A worker holds the fruit of the cocoa tree, the precious bean encased in white pulp
He said it was like "blood for the sharks" on the floors of stock exchanges.
"Speculative funds entered the market to buy cocoa in paper form," before it was harvested, sending prices soaring.
While some local producers reap the benefits, Ontaneda and other experts warn that the soaring prices will force people to cut back on their chocolate habits.
© MARCOS PIN / AFP Photo
© 2024 AFP
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