Ghana has dramatically raised the cocoa price guaranteed to farmers by more than 63% to boost their income and reduce smuggling to neighboring countries where cocoa fetches higher prices. This increase comes as cocoa supplies are tightening.
President Nana Akufo-Addo announced on Saturday that starting this September, for the 2023-2024 cocoa season, farmers will receive 20,943 Ghanaian cedi ($1,837) per ton. This is a significant jump from the 12,800 cedi they received last year.
Speaking at the kickoff event for the cocoa season in Tepa, a key cocoa-producing district, Akufo-Addo emphasized that this rate is the highest given to West African farmers in over 50 years.
The announcement comes as cocoa futures recently reached a 46-year high, reflecting concerns over limited supplies from West Africa, which produces about 70% of the world’s cocoa.
December’s London cocoa futures rose by 73 pounds, closing at 3,050 pounds per metric ton—its highest level since 1977. Crop challenges, especially the black pod disease in West Africa, contribute to a projected global deficit for the 2022-2023 season.
Akufo-Addo assured farmers of competitive rates in the coming years, stating, “Given the stable price forecasts, the government remains committed to rewarding our farmers fairly.”
Last season, the lower cocoa price in Ghana compared to Ivory Coast, the world’s leading cocoa producer, led to widespread smuggling, reducing Ghana’s expected cocoa output. As a result, the government ended the season early and moved the start of the next season to September.
Leticia Adu Yankey, from the Ghana Civil Society Cocoa Platform, noted that the financial incentive to smuggle cocoa to Ivory Coast and Togo has diminished with the new price adjustment.
Fiifi Boafo, a spokesperson for the COCOBOD regulatory body, told Reuters that Ghana aims to produce 820,000 metric tons of cocoa in the 2023–2024 season following the price change.
He added that around 150,000 metric tons were lost last season due to smuggling and the negative impact of illegal gold mining, locally known as “galamsey,” on cocoa farms.
Ghana is also considering borrowing $1.2 billion for annual cocoa purchases, with $800 million coming from a consortium of banks and the rest from alternative sources.
In related news, Cameroon, the world’s fourth-largest cocoa producer, recently increased its cocoa price by 25% for the 2023–2024 season.
Exchange rates as of this date:
1 USD = 11.4000 Ghanaian cedi
1 USD = 0.8023 pounds
1 USD = 612.5300 Central African CFA francs.
Source: Reuters
