Thought the idea was about silos?

E. Ablorh-Odjidja

January 19, 2020

Talks on an increase in cocoa pricing are back in the game in Ghana and the Ivory Coast; the idea behind it being “to support farmers during lean periods,” wrote the web publication Born2Invest, January 17, 2020.

True, there is a strong need for higher cocoa prices to help cocoa farmers earn a livable wage.

But the suggestion offered is laughable: that “teaming up to impose a $400 premium on each tonne of cocoa sold” is a sound approach to attain this objective.

And to equate this approach to the OPEC model on petroleum pricing, as has been stated, makes the idea not only a misnomer but more risible.

A sound OPEC approach, this tactic is not, and here is why:

The OPEC approach takes care of both supply and demand. By controlling the supply, one controls demand and, therefore, the price one gets for a barrel of oil; thus, the effectiveness of the OPEC plan.

The Ghana/Ivory Coast “teaming up” approach, however, avoids the supply approach and goes straight to the pricing point.

However, by increasing price precipitously, one would inadvertently encourage farmers to increase the supply. Oversupply will result, which incidentally will push the price downward at the commodity market - thus an approach that will be self-defeating.

Our “honorable” leaders in both Ghana should not want this approach.

So, I suspect that this so-called “teaming up” process is only a political stratagem; one not meant to solve any long-term problem for the farmer but to help promote a healthy political climate for the current governments in Ivory Coast and Ghana.

The stratagem is for immediate cash gain, to placate the farmer for now.  Or to ensure that there will be more in the revenue basket from which to loot safely.

Or as my esteemed nephew suggested, that “they are just making noise until the officials get bought!”  In other words, a strategy to put the squeeze on the cocoa buyer abroad until the payoff comes in.

It may also well be that this sudden bounty is in itself a bait cast by the buyers abroad.

In all this, I am also not ruling out incompetence on the part of our officials either. For, this “teaming-up” plan is transparently inane.  There must be a better way.  Sadly, that way is already known but ignored - the building of silos.

I thought, at one time that, Ghana and Ivory Coast were ready to build silos?

I take you back to an article I wrote in June of 2017, in support of the silos' idea. I asked in this article “Ivory Coast and Ghana to build storage facilities for cocoa?”

This question came about because of an article I read in the Business Day publication of Ghana, June 21, 2017, titled “Ivory Coast and Ghana in talks for $1.2bn loan for cocoa output.”

I thought building silos for the cocoa trade was a brilliant idea then, as I did to the same initiative by Nkrumah in the 60s. His silos are still at Tema, punching the skyline as if that was all they were meant for.

The very presence of these old silos must prompt the governments of both Ghana and Ivory Coast to team up to refurbish them for modern use and to bring about the OPEC planning.

This half-baked idea of “teaming up,” just to top off the seasonal cocoa revenue with a price increase, as said, is risible.

The cocoa price needs to go up.  The world knows the truth, for the sake of humanity and morality.  But for the pursuit of profit, for now, the purchasers keep the price low. 

The profit grip will continue to hold; mostly because of incompetence, disingenuity, and sheer ignorance on the part of officials in charge of the cocoa bureaucracy in Ghana and the Ivory Coast. 

And for lack of political will, these officials will continue to blunder and offer vapid solutions like the "teaming up" proposal.

"Due to over-abundant harvests, the ton had fallen to $1,780,”  “born2Invest” wrote:

However, forget the building of silos to control supply.  And hidden in plain sight also are the silos at Tema, which, probably, can be immediately refurbished for use!

The “teaming up” plan is meant “to impose a premium of $400 per tonne sold starting in October 2020.  Any revenue “Beyond a price of $2,900, the money would be channeled into a fund to support the industry during lean periods.”

And, "Through this premium, Côte d’Ivoire and Ghana want to better remunerate farmers who have been hit hard by the collapse of prices in 2017."

The justification is “to support the industry during lean periods.”  But it is during the same lean period, a period caused by some natural disaster, that forces farmers to produce less cocoa, which thereby curtails supply and thus forces the cocoa price to go up naturally because of shortage in supply.

But then, here comes this new plan "to support the industry during lean periods."

This plan puts a leash on the ability for the producer to control supply, even if by natural disaster - just like the intent to build silos in Ghana could have controlled supply.

Who do these officials then think they are helping with their plan during the "lean period," the producers of the cocoa or the purchasers? 

There was a time in Ghana when the cocoa farmer was the sole engine that generated the most bulk of our national wealth.

One ton of cocoa then could buy a modest Volkswagen. Today, 10 tons of the same cannot.

The "Born2Invest" article went on to say, “According to the World Bank, 80% of farmers in the cocoa sector live on less than $3 a day."

And that "They capture just 5.5% of this market valued at more than $100 billion a year, while the governments of consumer countries capture 15% of the market with VAT on chocolate bar sales alone.”

There could not be a better justification for a favorable price adjustment for the cocoa farmer and producer if we go by this World Bank statement.

Ghana and Ivory Coast must use the silos as leverage for an OPEC outcome.

With the necessary political will, proper protocol and guarantees of payments the investment needed for the silos, the “$1.2bn loan for “cocoa output,” can be gotten easily from the Diaspora communities of both countries.

E. Ablorh-Odjidja, publisher,

 www.ghanadot.com, Washington, DC, January 19, 2020.

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