by Toma Imirhe
The hangover from the disastrous production shortfalls from the previous, 2023/24 season, is depriving the country and its farmers from enjoying the benefits of the turnaround.
This comes at a time Ghana should be rejoicing over the strong rebound in its cocoa production for the ongoing 2024/25 crop season.
This is because nearly half of this season’s improved production is being used to settle unfulfilled sales contracts from the previous season and at prices less than half of what they are currently.
Bloomberg reported last week that, Ghana’s cocoa deliveries to warehouses are running roughly 70% ahead of last season helped by an increased harvest and efforts to reduce smuggling. About 560,250 tons of beans arrived at Ghana Cocoa Board’s warehouses between the start of the 2024-25 season and mid February, according to people familiar with the matter, who asked not to be identified as the information had not been made public.
This is more than one and a half times the 330,000 tons of arrivals at Ghana Cocoa Board depots by the same time last year, according to the international news agency’s sources. Indeed, although. Ghana late last year cut its forecast for this season’s harvest to less than 620,000 tons – and appears on course to exceed it – that is still much bigger than the 480,000 tons that the International Cocoa Organization estimates the country produced during the previous year. But it would still be among the smallest seasonal production in the past two decades, during which Ghana actually twice exceeded one million tons.
Most of the beans delivered to warehouses are destined for export, though a small proportion are sold to local processors at a discount.,
Ghana in September and November raised the amount it pays farmers in cedis at the farm gate following the rally in global spot market prices, to historic highs of around US$10,000 per ton, this helping to reduce the incentive to smuggle beans to nearby nations where prices were substantially higher because Ghana had earlier locked into forward market prices – which were still far less than US$3,000 per ton when the sales contracts were signed – in order to provide comfort for members of the international syndication of banks that customarily provide annual financing for local cocoa purchases from farmers, of close to US$2 billion.
Improved weather patterns and lower impact of crop disease and pests have also played a part in the rebound of Ghana’s cocoa crop production. A new funding model – forced on Ghana because the erstwhile lending international banks now doubt the country’s ability to fulfill its sales contracts – ,where there’s a growing dependence on top exporters to help finance bean purchases, has also improved the tracking of beans from farms as well..
But Ghana – both government and the farmers themselves – will not enjoy much of the benefits of this rebound because in the 2023/2024 crop season, COCOBOD could not supply 333,767 tonnes of cocoa, which it had sold at US$ 2,600 per tonne. As a result, the then management of COCOBOD rolled over these contracts into the 2024/2025 cocoa season.
This was revealed last week by President John Dramani Mahama himself during his presentation of the 2025 State of the Nation Address to Parliament. He went on to quantify the losses that Ghana is consequently incurring during the current crop season as about half of the production is being used to meet the unfulfilled obligations from the previous crop season, at last season’s forward market prices.
“This implies that for every tonne of cocoa delivered this year in fulfilment of the rolled-over contracts, COCOBOD and the Ghanaian farmer would lose US$ 4,000 in revenue” he lamented.
He confirmed that as at last week “COCOBOD has supplied 210,000 tonnes out of the rolled-over contract, resulting in a revenue loss of US$ 840 million for both COCOBOD and the Ghanaian farmer” who “will lose another US$495 million when the Board finishes supplying the remaining rolled-over contracts.”
Additionally, cocoa road commitments alone total GHc 21.7 billion, of which only GHc 4.4 billion is included in the total debt of GHc 32.5 billion. President Mahama alleges that “This debt has arisen mainly because of the decision in 2019 and 2020 to award road contracts worth over US$1 billion because of the 2020 election.”
Ghana is the world’s second largest producer cocoa after neighbouring Cote d’Ivoire, and between them they supply 60% of total global production. The market is closely watching supplies from the West African growers after poor harvests last season fueled a huge global shortage that sent prices soaring to a record high.
Top grower Cote d’Ivoire — where farmers’ pay is also set by the government — in September raised prices, and Ivorian bean arrivals for export are running almost 20% ahead of last season. Still, sales of next season’s crop are off to a slow start as high prices make it riskier for traders to hedge purchases, Bloomberg reported last week.
