Ghana Raises Cocoa Price to Boost Farmers’ Income
Ghana has increased the state guaranteed cocoa price paid to its farmers by over 63% in an effort to improve their income and prevent cocoa beans from being smuggled to neighboring countries where they can fetch higher prices. President Nana Akufo-Addo announced that farmers will receive 20,943 Ghana cedi ($1,837) per tonne for the upcoming 2023/2024 season, compared to 12,800 Ghana cedi they received in the previous year.
Highest Price in Over 50 Years
President Akufo-Addo stated that the new price is the highest paid to farmers across West Africa in more than 50 years. This increase comes as cocoa futures have reached 46-year highs due to concerns over tight supplies from the region, which is the source of around 70% of chocolate’s main ingredient.
In recent weeks, December London cocoa settled at 3,050 pounds per metric ton, the highest since 1977. The market has been setting new highs since late June, as crop problems, including black pod disease in West Africa, contribute to a significant global deficit expected in the current 2022/23 season.
Promises of Stable Prices
President Akufo-Addo assured farmers that the government will continue to provide good prices in the years ahead, thanks to the predicted stable prices. This commitment aims to discourage smuggling of cocoa beans to neighboring countries.
Impact on Ghana’s Output
Ghana experienced a lower than expected total output in the previous season due to smuggling of cocoa beans to Ivory Coast and Togo, where prices were higher. To address this issue, the government closed the season earlier than planned and brought forward the start of the new season to September instead of October. The increased farmgate price is expected to result in an output target of 820,000 metric tons for the 2023/2024 season.
Borrowing for Cocoa Purchases
Ghana is planning to borrow $1.2 billion for its annual cocoa purchases, with $800 million coming from a syndicate of banks and $400 million from other sources. This funding will support the increased farmgate price and help prevent further smuggling and destruction of cocoa farms.
Cameroon, another major cocoa producer in West Africa, also raised its farmgate cocoa price by 25% for the 2023/2024 season. These price increases in Ghana and Cameroon reflect efforts to support farmers and ensure a stable cocoa supply.
Ghana’s decision to raise the cocoa price for farmers is a significant step towards improving their income and preventing smuggling to neighboring countries. With the predicted stable prices and increased support, Ghana aims to maintain a strong cocoa industry and ensure a sustainable supply of this vital ingredient for the chocolate industry.