Living Income Differential is being applied without any issues – COCOBOD PRO

The Public Affairs Manager of the Ghana Cocoa Board (COCOBOD) Fiifi Boafo, has downplayed reports that chocolate makers around the world are finding ways of offsetting the cost imposed by the recently introduced living income differential (LID) on cocoa sales for the 2020/21 season.

The 400 dollar-per-tonne ‘living income differential‘ was introduced in July of this year to help combat farmer poverty. But according to Reuters even though chocolate makers backed the introduction of the Living Income Differential, they are partially offsetting the new cost by scaling down purchases and negotiating discounts on other parts of the price of Cocoa.

But speaking to Citi Business News on the revelation, the Public Affairs Manager of COCOBOD Fiifi Boafo, said there was no need to panic as trading of the commodity was ongoing without any issues.

“It is not for us to engage them. All that they are seeking to do is for us to come out and reveal that we have sold this or done this or done that. The trading is ongoing and we’ll keep it at that. There is no need for us to panic over anything, but if there is the need for us to speak to it, we shall do so.”

Fiifi Boafo made the comments following a recent release by Reuters which said some sources had revealed that Ivory Coast and Ghana’s move to combat farmer poverty with a living income premium for their cocoa sales was being undermined by chocolate makers scaling down purchases and negotiating discounts on other parts of the price.

According to the Reuters release, a source at Ivory Coast’s cocoa regulator said the country has sold about 400,000 tonnes of 2020/21 cocoa, while Ghana said it has sold 200,000 tonnes, around normal levels for this time of year.

The two countries have however had to slash the 2020/21 country premium to encourage sales because the summer stockpiling had strengthened the industry’s bargaining position and allowed them to slow purchases.

Ghana, Cote D’Ivoire announce more cash for cocoa farmers

Ghana and Cote D’Ivoire have announced a US$400 per tonne (Living Income Differential) to be paid to cocoa farmers, as part of a set of measures they believe will further cushion cocoa farmers — having already agreed to a minimum price for a tonne of cocoa sometime last month.

A meeting in Accra between the two countries together with global processors and buyers for the beans had ended with a tentative price of US$2,600 being for a tonne of cocoa on the world market.

The two countries had a follow-up meeting in Abidjan with stakeholders to deliberate further on the challenges affecting the cocoa sector.

A statement issued after the meeting said, “Following series of engagement with key stakeholders, Cote D-Ivoire and Ghana have established a new pricing mechanism for the trading of cocoa beans which, we believe, would help provide a remunerative price for the Farmer.”

The Mechanism which was introduced to industry players was understood. This system takes into consideration a fixed living income differential which would provide farmers with a decent income.”

“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 $400 that would go to the farmer.

Minimum price

Stakeholders in the cocoa value chain last month agreed to a proposal by Ghana and Cote d’Ivoire to set a minimum price of US$2,600 per tonne for the cash crop after a historic meeting in Accra.

The two-day meeting held in Accra, which was called at the instance of the two countries, was attended by processors, traders, chocolate manufacturers among other organizations that play various roles in the cocoa industry.

When the minimum price becomes effective,  the two countries will no longer sell cocoa beans on the world market below the US$2,600 floor price, thereby guaranteeing farmers a much higher price than currently prevails.