Ghana cocoa regulator plans ending fertiliser subsidy

September 10, 2013

cocoa beans
cocoa beans

Ghana plans to phase out a much-lauded fertiliser distribution programme over the next three to five years in its latest effort to cut costs amid weaker prices, officials said. Industry regulator Cocobod currently pays for roughly half the cost of fertiliser distributed to farmers under a programme which has helped boost annual output in the world’s number 2 producer from 400,000 tonnes to around 800,000 tonnes over the past decade.

But cocoa prices have fallen below the $3,000 per tonne FOB (free-on-board) price used to calculate Cocobod’s budget, forcing the body to weigh heavy cuts. “We are currently having challenges funding the programme because the current market prices do not provide the financing space to accommodate it,” a Cocobod manager told Reuters. The official, who is involved in implementing the programme, said Cocobod had already slashed it to 600,000 bags of subsidised fertiliser this year from two million bags the previous year.

He said Cocobod also found that much of the subsidised fertiliser never even reached Ghana’s farmers and instead was being smuggled out of the country, predominately to neighbouring Ivory Coast, the world’s top cocoa grower. “We have decided to cut back gradually on the supplies and phase out completely in 3 to 5 years by which time the farmers will have adjusted to buying their own fertilisers,” the official said.

The government must approve the plan before a final decision can be taken. However, a second official said that Cocobod was already likely to further halve next season’s subsidies to cover just 300,000 bags. Cocobod chief executive Anthony Fofie announced in an interview with Reuters last week that the body planned to remove a discount on light crop beans and phase out a flagship spraying programme. Ghana has outlined plans to boost output to one million tonnes per year through improved farming techniques and increase incentives for farmers. Courtesy Reuters

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