Interview: Joseph Boahen Aidoo
What is COCOBOD doing to bring digital payment systems into operation in the country?
JOSEPH BOAHEN AIDOO: Conventionally in Ghana, most licensed companies purchase cocoa from farmers and pay cash. However, this is expensive and fraught with risk. There is a need for an electronic, cashless system that does away with the inefficiencies and opacity of this system.
Since 2013 COCOBOD has piloted an e-zwich platform in the Volta Region and Western Region, together with Ghana Interbank Payment and Settlement Systems and the Progressive Licensed Cocoa Buyers Association. Under this project, electronic payments are sent from licensed buyers to farmers via district officers and local purchasing clerks. Following the success of this pilot, we are scaling up the initiative, integrating mobile money payments. A comprehensive farmer database is also under development to facilitate the project. This resource will also provide data for productivity-enhancing interventions in the sector.
How has climate change affected the industry?
AIDOO: Increased temperatures and rainfall variability create poor conditions for the growing of cocoa, while also increasing the risk of pests and diseases. These issues are being tackled in collaboration with the private sector through a variety of initiatives aiming to ensure the long-term stability of Ghana’s cocoa production. Hybrid and drought-resistant strains are being introduced, moribund farms are being rehabilitated and diseased trees destroyed. This is being combined with a process of intercropping plantain with cocoa, thereby providing shade for younger cocoa plants and reducing their mortality rate. Moreover, there is also the Cocoa High-Tech Programme, which is intended to boost soil fertility. This includes the adoption of artificial pollination methods, which economise land use rather than encourage deforestation. In order to help increase the sheer quantity of cocoa produced, we are also pursuing farm irrigation, mass pruning, subsidised fertilisers, and the containment and control of the cacao swollen-shoot virus. The African Development Bank, the World Bank and Export-Import Bank of China are all providing funding for these and other programmes.
What impact will increased cooperation with Côte d’Ivoire have on the cocoa market?
AIDOO: Ghana and Côte d’Ivoire are the two largest cocoa producers, accounting for over 60% of global production. Increased cooperation will allow us to harness resources, harmonise market and trading systems, and build strategic synergy. Together, we are working to improve productivity by building more efficient supply chains to thereby attain fair prices for farmers.
Chocolate consumption in Europe and North America is plateauing, but we are working to increase domestic and regional demand. Our goal is the formation of a sustainable global cocoa economy that navigates climate change and other challenges, while mitigating low incomes and inefficiencies.
How is the marketing of cocoa determined?
AIDOO: Through the Cocoa Marketing Company (CMC) – a subsidiary of COCOBOD – a hybrid strategy of forward and spot sales is implemented. The CMC’s flexible framework takes advantage of technical trends for better pricing for farmers and the wider industry. Over 60% of cocoa beans are sold forward in order to help with planning, and this plays a key role in ensuring price stability for farmers. This is used as a hedge to cover industry costs and as collateral for annual syndicated loans, along with medium-term development loans.
However, a significant share of the crop is ready to sell on a spot basis when the market changes. With the current backwardation, we had the capacity to take advantage of higher prices and increase our spot market exposure. As there is a large measure of uncertainty to the futures market and spot premiums, it is therefore important to develop and employ a flexible approach.
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