The recent increase in Ghana’s cocoa producer price, while initially seen as a positive move, has been undermined by the depreciation of the cedi. Despite the government’s efforts, cocoa farmers are worse off now than they were in September due to the cedi’s weakening value.
President Nana Addo Dankwa Akufo-Addo announced a new cocoa producer price of GH¢49,600 per tonne for the 2024/2025 cocoa season, an increase from the GH¢48,000 per tonne announced in September this same year. However, the GH¢49,600 per tonne now converts to approximately US$3,000.60, compared to the previous price of GH¢48,000 which was worth about US$3,061 when the cedi had a stronger exchange rate two months ago.
This probably has sparked dissatisfaction among cocoa farmers. Many had hoped for a higher price, especially considering the global price of cocoa, which currently trades at around US$7,000 per tonne. Issifu Issaka, President of the Ghana Cooperative Cocoa Farmers Association, voiced concerns in an interview with Joy News, stating that the government’s promise to offer cocoa farmers 70% of the world price had not been met. Some of the farmers feel shortchanged and are disappointed with the new pricing.
Comparatively, Ghana’s neighbouring countries offer more competitive prices for cocoa. While Ivory Coast offers the equivalent of GH¢48,530 per tonne, slightly lower than Ghana’s new price, cocoa bean buyers in Ivory Coast have the flexibility to pay above the official price. This flexibility could incentivize cross-border smuggling, where Ghanaian farmers may sell their cocoa to Ivory Coast buyers for higher returns. However, Togo remains the most attractive market, offering nearly double what Ghana is paying its farmers—GH¢94,360 per tonne (or 3,500 CFA per kilogram). Togo’s unregulated market allows traders to offer prices closer to the international spot market rates, a practice Ghana cannot match due to its reliance on the futures market.
Addressing Ghana’s Cocoa Industry Challenges
Analysts argue that Ghana’s relatively lower cocoa prices, compared to countries like Togo, are due to the large and expensive bureaucracy within the Ghana Cocoa Board (COCOBOD). The high operational costs of COCOBOD divert significant funds that could otherwise go to farmers. These experts believe that with a leaner, more efficient COCOBOD, Ghana could offer significantly higher prices to its cocoa farmers, potentially matching Togo’s rates and making cocoa farming more appealing, especially to younger generations.
In addition to the pricing issues, Ghana has been experiencing a decline in cocoa production. The 2023/2024 season recorded one of the lowest production volumes in nearly two decades. Several factors are contributing to this drop, including the impact of climate change, illegal mining (galamsey), and an aging farming population. There have been calls for a restructuring of COCOBOD’s operations to make the institution leaner and more efficient, allowing more money to flow to farmers. Some experts have even suggested that the government should consider paying cocoa farmers in U.S. dollars, a move that could help shield them from the adverse effects of cedi depreciation and potentially curb the temptation to sell their lands to illegal miners.
As the challenges in the cocoa sector persist, it is clear that significant reforms are needed to ensure that Ghana’s cocoa farmers receive fair compensation and to keep the country competitive in the global cocoa market. Without addressing these issues, analysts say Ghana risks further losing its standing as a leading cocoa producer and exporter in the world.
