The recent turmoil experienced in the cocoa sector flowing from the government’s decision to slash cocoa prices from GH₵3,625 to GH₵2, 587 poses long term risks to the cocoa industry, our environment and the economy.
The Institute of Economic Research and Public Policy (IERPP) has observed that the government’s given reasons for the price reduction have not met the happy agreement of cocoa farmers. They have roundly rejected the decision and criticized the government for exhibiting bad faith in the new price announcement. IERPP has analyzed the possible adverse impacts resulting from the current state of affairs and come to the following conclusions:
Threats to National Security
With over one million people in the cocoa sector, the price reduction disincentivizes more people from going into the industry. Thousands will likely abandon their cocoa farms and may be forced to engage in other activities that might pose dangers to the country’s economy. Unemployment will hit those in the industry as that could lead the unemployed into nefarious activities that could endanger not only their lives but those of others as well.
Environmental Degradation from Galamsey
Cocoa farmers find no motivation to continue staying in the sector. This could lead to some of them cutting down their cocoa trees to enable them to engage in Galamsey activities themselves or selling their lands to illegal miners. These pose enormous risks to the environment. Ghana is already struggling to deal with illegal mining activities. This crisis could aggravate the situation.
Downturns in the Economy
Cocoa, for years, has been the mainstay of Ghana’s economy. It’s been the economy’s backbone for decades until recent additions in the areas of oil and mining. With the current challenges, danger looms for the country’s economic trajectory if the situation is not addressed. Without this sector, the economy will be badly hit if not crippled. The consequences of a collapsed cocoa sector cannot be underestimated.
What Government must do
The Ghanaian Government must, as a matter of urgency, take steps to bring calmness to the cocoa sector. The government must restore the old price to the farmers as the effects of a restoration now cannot best the long term but catastrophic consequences that could result from the challenges faced in the sector.
Conclusion
The Institute of Economic Research and Public Policy urges the government to be prepared to part ways with some cash to water down the crisis by paying cocoa farmers GH₵3,625. Failure to do so could result in dire economic and security consequences for the country in a few years to come.
Professor Isaac Boadi
Executive Director
IERPP.
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