In contrast to previous year, when a $3,000 price differential led to daily smuggling incidents, Ghana has essentially eradicated cocoa smuggling this season by keeping prices closer to international rates, according to Dr. Randy Abbey, Chief Executive of the Ghana Cocoa Board (COCOBOD).
Price differences are the main factor driving smuggling activity, according to Dr. Abbey, who was interviewed on JoyFM’s Newsfile show. Border towns usually operate in two markets and select the one that offers the best deals.
“Research shows that anytime there is a gap of more than $400, the incidence of smuggling is very high,” Dr Abbey stated, adding that COCOBOD constantly monitors Ghana-Côte d’Ivoire pricing to manage this risk.
The head of COCOBOD vividly described how, during the 2023–2024 season, Ghana was paying farmers $3,100 a tonne, while spot prices in nearby nations were between $6,000 and $7,000.
“Every single day, we had an issue with smuggling,” Dr Abbey recalled how the enormous price differential provided such compelling incentives that smugglers would approach Ghanaian farmers directly to buy cocoa beans.
He revealed that smugglers offered farmers between $4,000 and $5,000 per tonne, eliminating the need for farmers to take the risk of smuggling themselves. The illegal trade became so brazen that smugglers used various vehicles, including four-wheel drives and even hospital ambulances, to transport beans across borders.
Regular meetings were conducted to discuss the matter after it got bad enough to justify national security intervention.
The dynamics are entirely different this season. Even while Ghana’s current prices are still less than international spot prices, with differences between $1,000 and $2,000, the difference is now in Ghana’s favor because it removes incentives for smuggling.
Although the price difference could theoretically encourage “reverse smuggling,” in which beans are imported into Ghana from neighboring countries, Dr. Abbey clarified that this has not happened because of liquidity issues in the Ghanaian cocoa industry.
He disclosed that farmers no longer had to risk smuggling themselves because traffickers compensated them between $4,000 and $5,000 per tonne.
The illicit trade got so blatant that traffickers transported beans over borders using a variety of vehicles, including hospital ambulances and four-wheel drives.
Regular meetings were conducted to discuss the matter after it got bad enough to justify national security intervention.
The dynamics are entirely different this season. Even while Ghana’s current prices are still less than international spot prices, with differences between $1,000 and $2,000, the difference is now in Ghana’s favor because it removes incentives for smuggling.
Although the price difference could theoretically encourage “reverse smuggling,” in which beans are imported into Ghana from neighboring countries, Dr. Abbey clarified that this has not happened because of liquidity issues in the Ghanaian cocoa industry.
“Even those who intend to smuggle know that Ghana is not buying,” he said, referring to COCOBOD’s current cash flow constraints that have left some beans unpurchased.
NKONKONSA.com
