President John Dramani Mahama has explained to cocoa farmers that the painful decision to reduce the farm gate price of the commodity was necessary to address liquidity challenges in the sector.

According to him, the decision would be beneficial to the farmers and the health of the economy in the long run.

He said if that had not been done, the country could have been saddled with pumping billions of borrowed funds to keep the price afloat.

That, he told Parliament of Ghana when he delivered a message on the state of the nation on Friday, could slid the country back to another economic meltdown.

“This unplanned expenditure would have taken us right back to the very devastating economic problems we have only recently begun to escape,” he noted.

“This crisis was triggered by general financial indiscipline, huge deficits and massive debt occasioned by persistent unbudgeted expenditure to meet the ends of convenient politicking.”

He explained that the reduction in the price from about GH¢3,600 to GH¢2,500 was to achieve competitive pricing and resolve acute liquidity challenges in the sector.

The slump in cocoa prices on the international market has forced the leading producing countries — Ghana and Côte d’Ivoire — to review the farm gate price with the latter being the latest to reduce the price from 2,800 CFA francs per kilogram to 1,000 CFA francs.

The price cuts have taken a political twist with the opposition party accusing the government of shortchanging farmers, pitting the farmers against the regime.

But President Mahama reemphasized that the decision is a win win situation for both farmers and the government.

“So, while fully understanding the concerns and protests of our farmers, I can firmly assure them that the reforms announced by the government will bring about a total transformation of the sector and guarantee them a fair price that enables them to cover the cost of producing the commodity and make decent margins,” President Mahama assured.

Ghana, he said must learn from its mistakes of the past if it were to make a sustained growth.

“Mr Speaker, a nation that does not learn from past mistakes cannot get out of the cycle of problems that impose hardship on its citizens,” he noted.

“The difference between facing economic hardships and avoiding them is the exercise of sound economic judgement, and I am determined to make decisions that ensure our collective well-being and avoid suffering for all our citizens.