Ghana’s cocoa sector rubbing shoulders with oil and gas industry

Almost two years after the commercial production of oil has begun in Ghana, the country’s cocoa industry remains strong and buoyant.

The sector has defyied earlier speculations and concerns that it would be suffocated by the emerging oil and gas industry and consequent neglect by government.

So far the cocoa industry has maintained its status as the second largest foreign exchange earner for the country and contributes about 35 percent of the country’s gross domestic product and together with other agriculture activities employ 55 percent of the population.

As at the time of filling this report, according to the International Cocoa Organization Commonwealth (ICCO) daily price, cocoa is trading at $2411.99 per ton. On the London futures cocoa is trading at £1535.67 per ton and on the New York futures at $2365.00 per ton.

The ICCO daily price for cocoa beans is the average of the quotations of the nearest three active futures trading months on NYSE Liffe Futures and Options and ICE Futures US at the time of London close. London prices are converted into United States dollars per ton by using the current six-month forward rate of exchange in London at closing.

Meanwhile, on the international commodities market, West Texas Intermediate light sweet crude Oil was trading at $86.01 a barrel, and Brent North Sea crude at $109.86 a barrel. Gold is also trading at $1711.59.

According to Mr Noah Kwasi Amenyah, Public Affairs Manager at the Ghana Cocoa Board (Cocobod), the cocoa industry has the potential to even surpass gold, noting that “The objective of cocoa is not just to overtake gold as the number one exchange earner, but to become a sustainable product in a way that takes good care of the environment and also gives the farmer the best of income for what he produces, and also satisfy the requirement of the international market.”

Globally, Cocobod has an ambitious plan to become the number one best quality producer of cocoa. “In five years time, we want to be the world’s best quality cocoa producer, and see more Ghanaians consuming cocoa so that they get the health benefits as well. Although it is not our immediate objective to overtake Ivory Coast to become the world’s largest producer of cocoa, with the launch of our six year national cocoa rehabilitation programme we are likely to do so sooner than later,” he emphasized.

Mr Amenyah explained that the cocoa industry has shrug off the challenge from the oil and gas industry and others, and managed to maintain its status due to strategies and structures put in place dating back to 1999 which has changed the face of cocoa production in Ghana.

He said these strategies have been perfected over the years and that culminated in the country achieving its  one million tons production target in the 2010-2011 production seasons.

He highlighted some of the strategies undertaken by COCOBOD as being research into the fertility status of the country’s soil to determine what type of fertilizer to use; a new hybrid development that reduces harvest time to two years instead of the five to seven years harvest period; and free spraying for all cocoa farmers.

Mr Amenyah indicated that the gap between research and farmer activities was bridged by the reintroduction of extension which is being undertaken through a public private partnership that allows others to bring in resources and technology.

“An Extension activity allows farmers to know what to do and what time to do it. This can even be done through mobile phones where farmers are sent text messages instructing them as to what to do and at what time,” he explained.

He further pointed out that apart from the training of farmers on what to do on their farms, the extension activity also involved the training of farmers in business, alternative sources of income such as honey making, bee keeping and snail rearing.

He observed that COCOBOD has embarked on farmer productivity to motivate farmers to produce more. “Through this initiative we have started giving higher and attractive remunerations cocoa prices to farmers. This has attracted more young people into cocoa farming, reduced smuggling and encouraged those who are already farming to produce more,” he added.

Cocoa is a renewable resource while oil and gold are not. Currently there are not many linkages between the two industries apart from fertilizer which is a byproduct of oil. It is possible that as the oil industry grows more linkages would be established.

Though the cocoa industry has managed to co-exist with the oil and mining industries, there are major threats that these two industries present.

According to Mr Amenyah, “The major threat from the oil industry to the cocoa industry is labour. Most of the labourers at the COCOBOD warehouses at the Takoradi port are now leaving to join the oil and gas industry. The services of the few who stayed have become expensive. This has compelled us to start mechanizing our warehouses”.

Another threat from the oil and mining industries is pressure on the road in the cocoa growing areas, which is increasing by the day leading to the deterioration of the road and heavy traffic. This is because both players in the cocoa, gold and oil and gas industries use almost the same routes.

“We are pleading to government to put in place a mechanism that will ensure that these heavy duty vehicles from the mining and oil and gas industries that use the road in these areas also contribute to road maintenance,” he said.

By Gilbert Boyefio