Ghana is set to increase cocoa prices from GH¢ 515 per bag and 8240 per ton to GH¢ 625 per 64-kilogram bag to 10000 per ton for the next harvest season (October 1st of 2020 through to September 21st of 2021) based on the Living-Income Differential (LID) charged on beans.
This yet to be made public development, would see a 21% increment in cocoa prices after the $400 per metric ton premium was made applicable. According to Bloomberg, two notable persons with deep knowledge of the sector disclosed this under anonymity.
In July last year, Ghana and Ivory Coast, the two leading growers of cocoa beans in the world announced that the inception of the LID would necessitate a pay rise for cocoa farmers. Ivory Coast and Ghana have agreed initial deals to sell cocoa with a living income premium of $400 a ton added to the price, in a bid to reform the way global cocoa is priced. This move became apparent in the two country’s bid to alleviate farmer poverty and increase livelihood outcomes.
The two countries plan to use funds raised from the LID to guarantee farmers get 70% of a $2,600 a ton(FOB) target price. If global prices rise above $2,900, proceeds from the LID will be placed in a stabilization fund that would be used to ensure farmers get the target price when market prices fall.
Industry players around the globe were in acquiescence with the LID despite the news receiving reactions from traders.
If this pans out to be true, it would be a big deal for cocoa farmers in the country and a giant step towards economic liberation for many.