GHANA - Ghana's cocoa industry is bracing for another major shift as the country's cocoa regulator prepares to announce a substantial increase in farmgate prices for the 2024/25 season. 

According to reports from Reuters and other sources, the state-guaranteed price paid to cocoa farmers is expected to rise by nearly 45% to 70% from the previous season. This move, if confirmed, marks the second consecutive increase in cocoa prices.

Earlier in 2024, Ghana had already increased its cocoa farmgate price by 58%, reaching 33,120 Ghana cedis (approximately US$2,499) per ton. This adjustment aimed to enhance farmers' incomes and curb the smuggling of cocoa beans out of the country. The increase in prices follows similar actions by Côte d’Ivoire, another major cocoa producer.

The anticipated price hike comes amid rising global cocoa prices, driven by strong demand and challenges in West African cocoa production due to plant diseases and adverse weather conditions. 

The International Cocoa Organization recently projected a global cocoa deficit of 462,000 tonnes for the 2023/24 season, signaling a low stocks-to-grinding ratio not seen in 45 years.

The Ghana Civil Society Cocoa Platforms (GCSCP) has called for the minimum farmgate price for the 2024/2025 season to be set at US$3,662 per ton. Their request is based on the average market prices from the previous season and the need to ensure fair compensation for farmers. 

They also recommend an upward revision of prices mid-season to account for currency volatility and reduce cross-border smuggling.

Despite the expected increase, the Producer Price Review Committee has yet to finalize the decision, and Cocobod, Ghana’s cocoa marketing board, is awaiting government approval. The announcement, which typically occurs in September, has been delayed this year.

Surge in Nigeria’s cocoa exports

In related news, Nigeria has seen a dramatic surge in cocoa exports, with a 304% increase in the first quarter of 2024 compared to the same period in 2023. This surge, attributed to high demand and naira depreciation, has significantly boosted the country’s cocoa revenue. 

However, the rise in export revenue has not yet translated into increased production, which remains stagnant at 280,000 metric tonnes.

The global cocoa market remains volatile, with prices reaching record highs of US$12,261 per tonne in April 2024. This price surge has led to higher costs for chocolate products and increased profits for some cocoa farmers. Nonetheless, experts warn that the current price rally may not be sustainable, with potential impacts on production levels and market stability in the coming years.