Ghana’s cocoa industry regulator called for boosting the rate farmers get for their crop by more than 60% to discourage them from smuggling beans to the neighboring Ivory Coast where returns for the commodity are better.

The proposed new farm-gate price is 20,800 cedis ($1,825) a ton for the season that starts Friday, up from 12,800 cedis for the current season, according to people familiar with the matter. The increase is still awaiting governmental approval, they said.

The new price is expected to help Ghana match rates with neighboring Ivory Coast, which is expected to increase farmers’ rates from the $1,334 per ton set for the current season. Ghana, the world’s second-largest cocoa producer, has seen output plunge, partly due to unofficial sales to Ivory Coast where a stronger currency is more attractive for farmers, the people said.

The surge in local prices comes as global cocoa supplies tighten, which has pushed New York cocoa futures to a 12-year high. The market is headed for a third annual deficit as adverse weather hits producers in the West Africa cocoa belt, and the return of El Niño risks further disruption.

Ghana Cocoa Board spokesman Fiifi Boafo declined to comment on the new rate, which he said will be announced by President Nana Akufo-Addo Sept. 9. 

The regulator is also struggling to raise funds to buy beans in the impending harvest amid the country’s recent International Monetary Fund bailout, part of which involved the restructuring of debt used to purchase cocoa. It’s looking for alternative financing from international banks.  

Source: Bloomberg

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