Ghana Set to Raise Cocoa Farmers’ Pay by 45%

In a significant move to support its cocoa farmers and curb the rising issue of bean smuggling, Ghana is preparing to increase the price paid to farmers by nearly 45% for the upcoming 2024/25 crop season, sources have revealed. This decision aligns with global trends of rising cocoa prices and follows similar measures taken by neighbouring Ivory Coast.

Ghana, the world’s second-largest cocoa producer, had already raised its farmgate price by more than 58% earlier this year to GH₵33,120 (US$2,123.08) per metric ton. This price adjustment came after Ivory Coast, the leading global cocoa producer, raised its farmgate price to 1,500 CFA francs (US$2.55) per kilogram.

According to one source familiar with the review, the price for Ghanaian cocoa farmers is expected to rise to GH₵48,000 per metric ton for the 2024/25 season, translating to GH₵3,000 per 64 kg of cocoa beans. The price hike is expected to be confirmed by the Ghanaian cabinet, with sources indicating it is unlikely the decision will be altered.

The increased price is designed to enhance the livelihoods of cocoa farmers and reduce the growing issue of smuggling, where Ghanaian beans are illicitly transported to neighbouring countries offering higher prices. Such smuggling has been a problem exacerbated by the delayed payments to farmers and lower prices offered in Ghana compared to other West African nations.

Ghana and Ivory Coast, which together account for over 60% of the world’s cocoa production, have been collaborating on initiatives to coordinate farmgate prices and stabilise cocoa supplies. Both nations aim to ensure that their farmers earn a fair income amid fluctuating global market conditions.

Global cocoa prices have surged this year due to crop diseases and adverse weather conditions in West Africa, pushing the market towards a third consecutive deficit. The International Cocoa Organisation (ICCO) recently raised its forecast for the global cocoa deficit to 462,000 tons for the 2023/24 season. This marks the lowest stocks-to-grindings ratio in 45 years.

Cocobod, Ghana’s cocoa marketing board, had initially planned to launch the 2024/25 season on September 1 with a reduced production target of 650,000 tons. However, this launch has been delayed as the country seeks to finalise the new pricing structure and combat bean hoarding.

Ghana’s cocoa sector has faced a myriad of challenges, including illegal gold mining activities (‘galamsey’) encroaching on farming land, increased agricultural input costs, and successive poor harvests due to climate change and crop diseases. Additionally, the cocoa supply chain has seen complications from speculative trading on futures markets, contributing to price volatility.

In a recent statement, Cocobod emphasised that increasing the producer price of cocoa is crucial to the welfare of farmers, a priority of President Nana Addo Dankwa Akufo-Addo’s administration. The statement highlighted that since 2017, under the New Patriotic Party (NPP) government, the cocoa producer price has seen a 336% increase, from GH₵7,600 per ton in 2016/17 to the current GH₵33,120 per ton for the 2023/24 season.

As Ghana continues its efforts to stabilise and strengthen its cocoa sector, this price increase is a step toward ensuring the long-term sustainability of one of the country’s most vital industries.