The over 40% appreciation of the cedi since the beginning of the year, while a welcome boost for Ghana’s economic stability, has had unintended consequences for the cocoa sector.
This currency effect has meant that the recently announced cocoa producer price saw only a 4% increase in cedi terms, despite the fact that in US dollar terms, the rise amounts to over 60%.
While the cedi stability is undeniably positive for the broader economy, by helping to reduce import costs and inflationary pressures, it poses a challenge for Ghana Cocoa Board (COCOBOD). Analysts say the situation demands uncompromising efficiency within COCOBOD’s operations to ensure that farmers still receive fair and competitive prices for their produce, even when cedi revenue growth is restrained by exchange rate movements.
Economic observers also argue that government must complement currency stability with aggressive measures to reduce the cost of goods and services, particularly in rural farming areas. By lowering input costs, from fertilizers and pesticides to transportation, farmers’ profit margins could improve, even if producer price increases remain modest.
They argue that if costs are brought down significantly, a 4% price increase could still translate into a higher real income for cocoa farmers. But if costs remain stubbornly high, farmers will feel shortchanged, and the sector could face production risks.
Recent agitation from some cocoa farmers following the announcement of the new producer price is an indication that the smaller-than-expected increase is already a point of contention. If the perception takes hold that cocoa farming is no longer rewarding, Ghana risks undermining the very foundation of its most important export crop.
As the world’s second-largest cocoa producer, Ghana’s competitiveness depends not only on global market conditions but also on how effectively it manages domestic factors such as exchange rate stability, operational efficiency, and cost reduction, to safeguard farmer livelihoods and sustain production growth.
Beginning this crop year, the government will distribute free cocoa inputs to farmers across the country as part of renewed efforts to boost productivity and revamp the sector. The input support package includes free fertilisers (both liquid and granular), insecticides, spraying machines, fungicides, and flower inducers, all at no cost to the farmer. This is intended to cushion the farmers against the lower-than-expected increase in the producer price. But analysts warn that these freebies may not be sustainable, pushing for a more comprehensive approach to bring down the general cost of living.
