Accra: Ghana, renowned as the world’s second-largest cocoa producer, is grappling with a dire supply predicament that may result in the deferment of up to 350,000 tons of cocoa beans to the next season. This development exacerbates the already precarious situation of the global chocolate industry, which has seen cocoa prices soar this year due to consecutive seasons of subpar harvests in Ghana and Ivory Coast—countries that collectively account for 60% of the world’s cocoa output.
The market had initially projected that Ghana would carry over approximately 250,000 metric tons of cocoa—about half of its current crop. However, Cocobod, the nation’s cocoa authority, has indicated intentions to postpone “some volumes,” albeit not to the extent of 350,000 tons.
Adverse weather conditions, bean diseases, and the encroachment of illegal gold mining activities—which frequently displace cocoa farms—are factors that have devastated Ghana’s cocoa crop.
Compounding these challenges, Ghanian farmers are increasingly smuggling beans across borders to capitalize on higher prices than those offered by state-regulated purchasing, further diminishing the already scant crop reserves designated for delivery within Ghana.
Insiders privy to the situation disclosed that Ghana had pre-sold approximately 785,000 tons of beans for the current 2023/24 (October-September) season but is likely to fulfill only about 435,000 tons of that commitment.
Traditionally, Ghana engages in forward sales of roughly 80% of its crop—typically ranging between 750,000-850,000 tons. However, last season witnessed a decline to approximately 670,000 tons, and expectations for this season do not surpass 500,000 tons. There is also skepticism regarding any significant rebound in the upcoming season.
The International Cocoa Organisation anticipates a global cocoa production drop of 10.9% to 4.45 million tons this season.
This shortfall necessitates that processors and chocolate manufacturers resort to existing cocoa reserves to meet their demands.
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Impact on Sales
The surge in cocoa prices is disrupting the longstanding trade practices within the industry. In Ghana, forward sales averages are utilized to determine the minimum price for subsequent seasonal purchases from farmers.
With an estimated 350,000 tons of forward-sold beans absent from this season’s yield, Ghana faces challenges with next season’s forward sales. Reports from traders indicate that only about 100,000 tons have been sold forward for the upcoming season.
These sales figures are particularly concerning as they represent less than half of the current global cocoa prices. Consequently, Cocobod may find it difficult to elevate farmer prices next season based on these sales figures.
Cocobod has affirmed that forward sales are proceeding as per usual but has refrained from disclosing specific volumes or pricing details.
If farmer prices remain stagnant, it could incentivize increased bean smuggling activities or prompt farmers to diversify into other crops or sell more land to gold mining operations.
