Why It’s Always a Trade-Off Between Cash to Farmers and Inputs Procured for Them
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By Hon. Joseph Cudjoe
Fmr Investment Manager, Ghana Cocoa Board
Fmr MP, Effia Constituency
Fmr Minister, Public Enterprises
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The Simple Truth
Cocoa farmers are not paid 100% of the FOB price. That means there are no truly free inputs. Every bag of fertiliser or bottle of pesticide distributed comes from money that is already part of the cocoa earnings.
In Fact
If cocoa farmers were to be paid 100% of the FOB price of cocoa and in addition government tops this up with inputs for cocoa farming procured using non-cocoa revenues, then government can claim “free inputs” distribution to cocoa farmers.
How Cocoa Revenue Is Shared
Cocoa farmers are currently paid 70% of FOB price whilst 30% of the FOB is retained by COCOBOD to fund inputs, pest and quality control, seedlings, and operations
Therefore the so-called “free inputs” are paid for with the portion of cocoa revenue that never reached farmers’ pockets.
The Trade-Off
Farmers face a simple choice, determined by policy:
1. Pay farmers higher producer price to farmers. Let farmers buy their own inputs, retain flexibility, and benefit directly from every tonne of cocoa sold. This was NPP’s choice and that’s why cocoa farmers were paid attractive prices even at the low level of FOB prices of cocoa.
2. Pay lower producer price to farmers. Centralize the procurement of inputs. Use the retained FOB price to pay for it. Distribute this politically as “free inputs”. This reduces flexibility and immediate cash to farmers, while keeping them dependent on state distribution. This is NDC’s choice since this provides centralized procurement opportunities for obvious reasons.
Both approaches use cocoa money. Nothing is truly free.
Why This Matters
Pretending that inputs are free hides the real economic truth:
• Farmers’ income is indirectly used to pay for the free inputs
• Cash flow, farm autonomy, and future price adjustments are affected
• Mismanagement of the retained funds can hurt both the farmers and the Board
The Bottom Line
There is no free lunch in cocoa. Every “free input” is funded from cocoa revenue that could have gone directly to farmers. The debate should be about who decides how farmers’ money is spent, not about whether the inputs cost nothing or something.
