Ghana and Cote d'Ivoire have agreed to institute a stabilisation fund under its new pricing mechanism for cocoa beans to cushion farmers should producer prices drop on the international markets.
Chief Executive Officer of the Ghana Cocoa Board (Cocobod), Joseph Boahen Aidoo, said the processes had begun to set up two accounts to that effect for both countries with a secretariat in Accra.
"Any extra value above $3,000 dollars Cost Insurance and Freight (CIF) or $ 2,900 Gross Freight On Board (FOB) of the achieved weighted average would be placed in these accounts.
"The purpose is to insulate producer price so that anytime prices fell below the critical value of $2,300 CIF or $ 2,200 FOB, then we can fall on the fund to support farmers," he explained to journalists at a news conference in Accra yesterday.
"The only mandate for the disbursement from these accounts will be for the sole purpose of supporting the achieved weighted average if it falls below $2,300 CIF or $2,200 Gross FOB," he maintained.
According to Mr Aidoo, should both countries accrue any amount above $2,600 FOB and $2,900 CIF per tonne of cocoa sold, farmers would be entitled to at least 70 per cent bonus payment.
The remaining amount, he said would go into supporting various government initiatives to boost the cocoa sector.
"When the achieved average Gross FOB price at the end of the cocoa season is between the minimum price level of $2,600 ($2,700 CIF) - $2,900 ($3,000 CIF), the farmer would be entitled to bonus payments. This minimum producer price would be legislated in both countries," he said.
Earlier last month, Ghana and Cote d'Ivoire succeeded in getting an agreement with global processors and marketers for the floor price of cocoa beans to be pegged at $2,600 per tonne.
It followed an intensive two-day stakeholder engagement to bring the two countries closer to achieving respective mandates of ruling governments.
Both countries have also agreed that beginning 2020/21 cocoa season, every tonne of cocoa bean that will be sold on the international market will attract an additional $400 as a living income differential.
The amount will be paid by buyers of cocoa under the new pricing mechanism to protect farmers' income while giving Ghana and Cote d'Ivoire (the world's top cocoa growers) a bigger say in determining how much the produce is sold for.
"A $400 per tonne (Living Income Differential) has been instituted to guarantee the floor price. This means for every tonne of cocoa sold, there is an addition of $400 that would go to the farmer," the Cocobod CEO, had intimated at a recent stakeholder meeting in Abidjan