Ghana lifts farmers' cocoa price in bid to deter smuggling

By Kwasi Kpodo ACCRA (Reuters) - Ghana sharply raised the price it will pay cocoa farmers for the new 2014/15 season to 5,520 cedis ($1,720) per tonne in a bid to deter smuggling to Ivory Coast, authorities said on Thursday. The rise represents a 63 percent increase on the 3,392 cedis price cocoa regulator Cocobod paid last season. It is also slightly higher than the price the world's top producer, Ivory Coast, announced this week that it would pay to its farmers for the new season. Ghana, the world's second biggest producer, will aim to produce more than 1 million tonnes in the season to begin on Friday, up from a forecast of 900,000 tonnes in the just-ended season, said Cocobod Chief Executive Stephen Opuni. "Smuggling has always been a problem when there are price differentials between the two countries," Opuni told a news conference. "The fact that our price is better now (means that) I don't think cocoa will be smuggled from Ghana." In the past, cocoa farmers particularly in the west of the country have loaded their produce onto lorries to take over the border to secure higher prices but Opuni said better security and the higher prices would stop this practice. Opuni said the new price was also aimed at motivating farmers and attracting new workers to a sector that many young people have left in recent years to move to cities. Cocobod will pay farmers an additional 5 cedis per 64 kg-bag of cocoa this season as a bonus on top of the season's price, which works out at 345 cedis per bag, he said. Ghana officials said on Wednesday they would pay 5,120 cedis per tonne of cocoa for the new season but revised that figure after a meeting of the pricing committee on Thursday morning. Officials declined to give a reason for the revision. TREE REHABILITATION Ghana's economy has grown strongly in recent years but the country faces fiscal problems including inflation that rose to a 4-year high of 15.9 percent in August and a currency that lost 40 percent of its value this year before rebounding somewhat. The fiscal instability may also have contributed to smuggling, according to analysts, and in the season ahead it will influence the value of the price paid to farmers in Ghana relative to the dollar and to Ivory Coast's price. Cocoa is one of the biggest contributors of revenue to the economy of the West African state along with gold and oil. The crop is grown in Ghana's eastern, western and central regions. Cocobod will continue a programme started in 2012 to distribute 50 million free trees to farmers over the next 4-5 years. The objective is to sustain the replacement of diseased trees as part of a crop rehabilitation programme aimed at increasing output, Opuni said. Farmers welcomed the price rise and said it would likely deter smuggling. "The level of increase is unprecedented and we are excited. It has ushered us into a new era of our livelihood and we are very grateful to government for recognising our toil," said cocoa farmer Nana Adjei Damoah.