STATEMENT BY DEPUTY MINISTER FOR FINANCE AND ECONOMIC PLANNING HON PROF GEORGE GYAN-BAFFOUR AT THE MEET THE PRESS SERIES HELD AT THE MINISTRY OF INFORMATION AND NATIONAL ORIENTATION, FRIDAY 11TH OCTOBER, 2007.

INTRODUCTION

Madam Chair
Colleague Ministers
Nana Chairman of Board of Directors of Ghana Cocoa Board
The Chief Executive of Ghana Cocoa Board
Nananom
Representatives of Licensed Buying Companies (LICOBAG)
Members of the Ghana Cocoa Coffee Sheanut Farmers Association
Other Stakeholders in the Cocoa Industry
Invited Guest
Members of the Press
Distinguished Ladies and Gentlemen

Permit me to express my profound delight to all of you for coming here this afternoon to witness the opening of the 2007/2008 Main Crop Cocoa Season. Indeed the enthusiasm with which we have gathered here is a clear manifestation of the importance of the “golden pod,” cocoa, to the Ghanaian economy. No doubt this sector will continue to be of great importance in the economy of Ghana.

IMPORTANCE OF COCOA

Madam Chair, Nananom, the present Administration will continue to give all the needed support to the cocoa sector to ensure that it achieves its maximum potential. Government appreciates the enormous contribution of the cocoa sub-sector to the general economy in terms of its contribution to the growth in GDP, foreign exchange earnings, poverty reduction among others. Government is also mindful of the nutritional and health benefits of cocoa, which is indeed quite enormous and will continue to support research and investments in this golden pod to bring the best out of it as we are convinced that the best is yet to come from the commodity. There are already several collaborations between Government, Ghana Cocoa Board and other Research Institutions in that regard.

POLICY MEASURES BY THE NPP GOVERNMENT

Madam, Nananom, I am delighted to say that for the past seven years since the current administration assumed office we have in collaboration with Ghana Cocoa Board put in place measures aimed at increasing production. These initiatives have yielded positive impact and have lead to continuous improvements in the cocoa industry leading to increased farmers’ earnings by way of increased output thereby improving the quality of life of our cocoa farmers and reducing poverty.

Among the policy initiatives vigorously pursued by Government over the period include:

INCREASED OUTPUT

Madam Chair cocoa output in the country has almost doubled since the 2000/2001 Crop Season. This is in no doubt the result of effective story of the implementation of the policy initiatives embarked upon by this Government. This has affirmed our position as the second largest producer of cocoa in the world. Thus since the 2003/2004 crop season when cocoa reached record output of 736,911 tonnes production has not fallen below 600,000 metric tonnes implying that such record outputs are sustainable.

Since 2001 cocoa outputs have been as follows:-

Source: Ghana Cocoa Board
Provisional as at 28th September, 2007

In the 2006/2007 Crop Season declared purchases by the Licensed Buying Companies as of 28th September, 2007 is 614,469 metric tonnes. The decline in production vis a vis last year’s was mainly a result of unfavourable weather pattern.

INCREASED PRODUCER PRICE

Producer prices have also increased nearly three fold since 2001. This has ensured that farmers are paid decent and remunerative prices. Currently, the farmer enjoys over 70% of the net FOB price or ¢9.15 million per metric tonne from ¢3.475 million in 2001.

PAYMENT OF BONUS

Bonuses to farmers have also been paid five times within the same period all aimed at providing incentives to the cocoa farmer.

Government will not relent on its promise at ensuring that the living conditions of the ordinary Ghanaian farmer is improved in view of their strategic role in the economy.

One of the numerous avenues by which Government shows its appreciation is by way of bonuses payments. Government will thus continue to reward the farmers by paying bonuses.

Between 2001 and 2006 the total bonus payments to farmers was ¢608.9 billion as detailed below :-

NEW PRODUCER PRICE

Madam Chair, Ladies and Gentlemen, as announced by His Excellency the President at this year’s COPAL Cocoa Day held at Sefwi Bibiani in the Western Region last Monday 1st October 2007, the Producer Price of cocoa has been increased from ¢9,150,000 or GH¢915.00 per metric tonne to ¢9,500,000 or GH¢950 per metric tonne for the 2007/2008 Main Crop Season which opens today. The new price for a bag of 64.0 kg is now ¢593,750 or GH¢59.38 as against ¢571,875 or GH¢57.19 proveiously. For a load of 30kg the price is ¢285,000 or GH¢28.50 naked ex-scale. It is projected that the output for the 2007/2008 Crop Year will be 650,000 metric tonnes.

BONUS PAYMENT FOR 2006/2007 MAIN CROP SEASON

Further more, I am also happy at this point to declare that in our resolve to ensure the welfare of our gallant cocoa farmers, Government has decided once again to pay bonus to our cocoa farmers for cocoa purchases for the past 2006/07 Main Crop Season.

The bonus to be paid is ¢275,425 or GH¢27.54 per bag of 64kg and will cover a tonnage of 581,779 metric tones purchased during the Main Crop. Another bonus will also be paid next year July to ensure that farmers have adequate money during the season
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Government will spend a total amount of approximately ¢160.24 billion or GH¢16.024 million to pay the bonuses. Since the NPP administration came into office in 2001, farmers have been paid bonus every year except in the 2004/2005 Season. The total amount of bonus payments to farmers is, therefore ¢769, 14 billion or GH¢76.91 million.

PAYMENT TO OTHER STAKEHOLDERS

Government is further committed to ensuring that all stakeholders in the cocoa industry are paid economic rates and fees to ensure that their businesses remain profitable. To that ends, increases in buyer’s margin for LBCs, hauliers rates for evacuation, among other rates and other charges have also been reviewed upwards. This is to ensure that the cocoa industry is able to sustain the gains made in the past seven years.

Interest rate on seed fund to LBCs has been reduced from 14% to 11% which will lower financing cost of the LBCs. COCOBOD has further decided to make 70% down payment to LBCs upon receipt of good quality cocoa beans while awaiting final documentation on consignments received.

OTHER INDUSTRIAL IMPROVEMENTS

Ladies and Gentlemen, some of the major problems encountered have still been in the areas of congestions at the Take-Over Centres, delayed payments for cocoa purchased from farmers and quality improvement among others. These problems affect efficiency in the cocoa industry. Government is giving all the needed attention to help address these challenges facing the industry in order to increase gains.

Sufficient jute sacks, twine, ink and tarpaulin have been purchased for the entire season. These inputs have already been released to the Licensed Buying Companies to ensure smooth purchasing operations.

This year Ghana Cocoa Board has raised a total amount US$900 million for purchasing operations. Ladies and Gentlemen we wish to put on record that this is the highest facility ever raised in the history of the cocoa industry and goes to show progress made in the sector and the confidence reposed in the economy by the international financial community. We therefore have adequate funding to cover all cocoa purchases estimated to be ¢6.175 trillion or GH¢617.50 million. We would like to take this opportunity to appeal to the LBCs to pay farmers promptly for cocoa purchased from them.

Ghana Cocoa Board will continue and intensify education of farmers on the proper method of fermentation. Our hardworking cocoa farmers are urged to stick to the fermentation practice of 6-7 days with two turnings to ensure that Ghana maintains its lead role in the production of good fermented cocoa, which gives us premium.

Ghana Cocoa Board has taken steps to ensure that there is adequate warehousing facilities so as to avoid congestion at the take over centres. To this end, I am happy to announce that Ghana Cocoa Board has secured a medium term facility of US$150 million, part of which will be used to expand and build new warehousing facility at Takoradi and Tema. COCOBOD has decided to rent parking lots in Takoradi and Tema where vehicles carting cocoa would park while awaiting their turn to be off-loaded at the Take-Over Centres on the basis of time of arrival. This is aimed at avoiding congestion at these Centres.

A new 50,000 tonne capacity warehousing complex at Tema is now in use. Conveyor belts are being installed at the new warehouses to facilitate the warehousing operations. We will appeal to the LBCs to respect whatever administrative arrangements are put in place for the delivery and take over of cocoa.

TARRING OF ROADS IN COCOA GROWING AREAS

Madam Chair, Distinguished Ladies and Gentlemen, Government has embarked on the tarring of selected roads in the remote cocoa growing areas while solar lighting system will be provided in some of the villages. This is aimed at increasing the efficiency of evacuation of cocoa and improving the standard of living of our farmers. An amount of US$50.0 million has been allocated for the tarring of approximately 513 km of rods. COCOBOD has also decided to increase the bad road factor from 20% to 30% and the return factor from 20% to 25% for hauliers of cocoa.

PROMOTION OF CONSUMPTION

Ghana successfully celebrated for the third time running, the COPAL COCOA Day at Sefwi Bibiani in the Western Region. The day was first celebrated in October 2005 in Accra. Government is by this and similar events committed to ensuring the promotion of local consumption of cocoa throughout the country.

OPENING OF THE SEASON

I now wish to formally announce that the 2007/2008 Main Crop Season opens today, 19th October 2007.

I would like to urge all stakeholders to get ready for the season and be prepared for the challenges ahead. All stakeholders are therefore to co-operate to ensure a smooth take-off and a successful season.

On behalf of His Excellency the President, the Government and the Good People of Ghana, we join hands to congratulate our hardworking cocoa farmers and all others who have contributed in diverse ways to our continued success in the cocoa sector in Ghana and to the world cocoa economy.

May God bless us all and continue to give us strength to contribute our quota in support of the economy.

THANK YOU

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