Ghana is set to record its lowest cocoa output in over two decades, with production expected to be slightly above 500,000 metric tonnes, a level not seen since the 2002/2003 season, according to the Ghana Civil-Society Cocoa Platform (GCCP).
Despite a global decline in cocoa production during the 2023/2024 season, international market prices surged to a record high of US$12,261 per tonne in April 2024. However, GCCP noted that cocoa farmers did not significantly benefit from these price hikes due to the Ghana Cocoa Board’s (COCOBOD) marketing strategy, which focuses on forward sales rather than spot sales.
However, as the 2024/2025 cocoa season approaches, GCCP has reflected on the past season’s challenges and outlined expectations for the upcoming farm-gate price announcement in September 2024.
The 2023/2024 cocoa season was marked by significant challenges affecting farmers and the broader cocoa industry in Ghana:
- Low Yields: Despite high international prices, low harvests resulted in minimal farmer earnings increases.
- Economic Pressures: High inflation, rapid currency depreciation, and increased costs of inputs and labour eroded the gains from high global prices, entrenching poverty among cocoa farmers.
- Extreme Weather: Prolonged rainfall and drought led to widespread black pod disease, devastating cocoa farms, especially in the Western-North region.
- Loan Disbursement Delays: Delays in disbursing cocoa syndicated loans left many Licensed Buying Companies (LBCs) unable to raise capital to purchase cocoa, frustrating farmers.
- Smuggling: Farmers smuggled cocoa to neighbouring countries in search of better prices, leading to low volumes of cocoa beans at Ghanaian ports. Government efforts to curb smuggling by reviewing farm-gate prices mid-season were insufficient.
- Illegal Mining: Illegal mining activities severely damaged cocoa farmlands, threatening farmers’ livelihoods.
- Rehabilitation Challenges: the government’s efforts to rehabilitate CSSVD-affected farms faced significant challenges, threatening previous gains.
- Ageing Farmers: With over 70% of cocoa farmers above retirement age, delays in implementing the cocoa pension scheme threaten the sector’s long-term viability.
Based on conservative estimates and current global market conditions, the GCCP expects a 65-70% increase in the farm-gate price of cocoa for the 2024/2025 season. Contracts for the 2024/2025 harvest were based on 2023/2024 market prices, which averaged around $6,104.33 per tonne.
Assuming farmers receive a minimum of 60% of the gross free-on-board (FoB) price, the farm-gate price should be set at a minimum of $3,662.60 per tonne. Depending on the exchange rate, this translates to a minimum of GH₵57,320 per tonne or GH₵3,583 per bag (64kg) of cocoa beans.
Given these developments, the GCCP, in a statement, has urged the government to aggressively implement existing policies, such as the Climate-Smart Cocoa Strategy and the AFR100 initiative, and to comply with the EU Deforestation Regulation.
Additionally, the GCCP recommends institutionalizing upward mid-term revisions of farm-gate prices to minimize cross-border smuggling and ensure fair compensation for farmers.
While commending COCOBOD’s efforts to enhance cocoa production through various programs, the GCCP highlights challenges such as nepotism and politicization in program implementation.
The GCCP also supports the government’s decision to reduce dependency on foreign financial instruments for cocoa purchases but warns of potential risks to local LBCs.
