Pricing

THE PRICING SYSTEM

Sierra Leone is a respected producer of cocoa and coffee, although the quantity produced is small compared to Ghana and Ivory Coast, about 80% of the people living in the east and southern regions of the country earn their livelihoods from their cocoa and coffee farms, and the country could pride itself in the production of good quality. The Produce Marketing Board which was the main exporting body was receiving a premium of £50.00 a ton. A t the time government had monopoly over the export of produce to the international market, squarely farmers received good prices for their produce as government was subsidizing the raise and fall of produce price in the world market.

In 1993 the Marketing Board was closed and the produce trade was liberalized, no mechanism was put in place to manage the quality and marketing of produce in the country. This resulted in the deterioration of produce quality, loss in income to farmers and exporters due to quality claims, rejection of cocoa by buyers abroad for failure to meet contract standards. However, the major burden of the consequences of the trade liberalization and the war was shouldered by the farmers as prices went terribly down between 1993 and 2002.

After the intervention of government in 2002 with the primary motive to optimize the income level of the farmer, before the start of each produce season, the Ad Hoc Committee now the Produce Monitoring Board (PMB) usually announce the indicative prices for cocoa, coffee, ginger, cashew, husk rice, piassava, sorghum and bennie seeds, to guide the farmers against the possible under pricing by buying agents and produce dealers. These prices are announced on the radio and also announced during sensitization meetings with the farmers.

Before now the review of prices was the sole business of the Ad Hoc Committee, with its transformation to the Commodity Marketing and Monitoring Unit (CMMU) and now the PMB, the setting of the indicative price is now done by the Produce Price Review Committee (PPRC). The PPRC comprise of a representative of the farmers, exporters, Ministry of Agriculture Forestry and Food Security (MAFFS) and the PMB.

Prices will be announced and reviewed whenever there is a drastic change in the world market price and the exchange rate or other determinant factors.

IMPROVEMENT OF THE PRICE TO FARMERS

Farmers now receive 60% of the FOB World Market Price for their produce.

METHODS USED TO IMPROVE THE PRICING SYSTEM

Determination of indicative price:

PPRC meets to decide on the price of produce at the start of each produce season using the following parameters:

  • World Marker Price
  • Exchange Rate
  • The price paid in the local market
  • Prices in neigbouring states

Announcement and dissemination of prices at the start of the season

  • Radio
  • Newspapers
  • Town Criers
  • Leaflets
  • News Letter

ENSURE COMPLIANCE TO PAY INDICATIVE PRICE

  • Produce Monitors ensure compliance by monitoring prices paid to farmers
  • Receipt system: Agents and dealers are required to issue receipts
  • Compliance by example: trusted agents are encouraged to pay the correct price by giving them commission and bonuses so that other agents are motivated to do the same.