GHANA- According to the Bank of Ghana, earnings from cocoa exports have dropped by 49% to US$599 million in the first four months of 2024 compared to the previous year, despite a 200% increase in international cocoa prices within the same period.
The unprecedented increase in international cocoa prices is attributed to a decline in cocoa production in Ghana and Ivory Coast, the largest cocoa producers in the world.
Cocoa production in Ghana dropped from an all-time high of a million tons in the 2020/2021 season to the projected 580,000 tons in the 2023/2024 season.
The Ghana Cocoa Board in January revealed the market is plagued by cocoa smuggling, adverse weather and disease, significantly affecting output and reducing trade.
High cost of farm inputs have also contributed to diminished cocoa outputs, affected by weakening of the cedis and dollar shortages. The Bank of Ghana revealed there has been a 40% increase in the cost of fertilizer in the past year.
Dr. Ernest Addison, Central Bank Governor, said, “The exchange rate pressures witnessed in recent weeks reflect a weakening of the current account surplus due to higher import demand and lower export revenue, especially a sharp fall in cocoa export earnings.”
All these factors created the perfect pricing storm, causing an almost 200% increase in cocoa prices in the past few months, increasing from US$2,435.60 per ton in December 2023 to US$12,260 per ton in April 2024.
Although prices have dropped slightly since then, market analysts predict a continuation of the current pricing volatility in the cocoa market because of cocoa production uncertainties in Ghana and the Ivory Coast.
However, the Ghanaian government has announced several intervention strategies to improve cocoa supply.
Ghana’s cocoa board announced it plans to borrow up to US$1.5 billion in syndicated loans over the next few months to compensate for low cocoa output and finance purchases for the 2024/2025 season.
The board will also provide farmers with free cocoa seedlings, subsidized pesticides and fertilizers, and extension services to improve cocoa yields in subsequent seasons.
However, analysts argue that although these interventions will help improve cocoa production, full market recovery might take years.
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