Election-related delays in payments and financing dent Ghana cocoa sector, even as cocoa emerges as a global commodity champion for the second year.
Ghana, the world’s second-largest cocoa producer, faces a significant challenge as its cocoa purchases falter. Election-related delays in government payments and financing have disrupted the flow of funds needed to support farmers. This slump comes during the critical cocoa harvesting season, jeopardizing income for millions of smallholder farmers who depend on timely payments to sustain their livelihoods and maintain production quality.
The Ghana Cocoa Board (Cocobod) has been hit hard by these delays, leading to a slowdown in purchasing activities. Cocobod switched to a new system this season where global traders and buyers are largely responsible for financing and bringing in much of the cocoa crop. They are then reimbursed when Cocobod pays for the beans.
Many farmers, left waiting for payments, are holding back their produce or seeking alternative buyers. This disruption poses risks not only to the local economy but also to Ghana’s reputation in the global cocoa market.
Global Cocoa Prices Soar to Record Highs
Ironically, Ghana’s struggles come against the backdrop of a booming global cocoa market. For the second consecutive year, cocoa has topped the global commodities rally, with prices reaching record highs due to tight supplies and strong demand. Key markets, including Europe and North America, have seen a surge in demand for chocolate and cocoa-based products, further driving up prices.
Cocoa nearly tripled in price over 2024, far outpacing gains in other commodities. It hit a record high of $12,931 a metric ton in New York earlier this month on forecasts of lower supply for a fourth successive season in West Africa following dry weather.
“The softs sector, led by cocoa and coffee, has been the main winner amid adverse weather in key growing regions, highlighting the risk to prices when products like these are produced and sourced from relatively small geographical areas,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
Supply chain constraints in other major cocoa-producing countries, such as Ivory Coast, coupled with unpredictable weather patterns, have exacerbated global supply shortages. This has positioned cocoa as one of the most sought-after commodities on the international stage, with analysts predicting continued price strength in 2025.
Missed Opportunities for Ghana
Ghana’s inability to capitalize on this global cocoa boom is especially disappointing. With prices at a decade high, the country could have reaped significant economic benefits. Instead, election-related inefficiencies and financing delays have undermined its competitive edge.
This situation also highlights the critical role of governance and financial stability in maximizing agricultural output and trade opportunities. For Ghana, which depends heavily on cocoa for foreign exchange earnings, the slump could have long-term repercussions if not addressed swiftly.
A Call for Structural Reform
To regain its footing in the global cocoa market, Ghana must implement structural reforms that ensure timely payments to farmers and efficient financial systems. Addressing these election-related bottlenecks is essential not only for stabilizing domestic production but also for maintaining the confidence of international buyers.
The current crisis serves as a wake-up call for policymakers to prioritize the agricultural sector’s needs, especially as global commodity markets become increasingly competitive. Ensuring that farmers are paid on time and that financing channels are robust will be key to harnessing the full potential of the cocoa industry.
While cocoa remains a global commodity star, Ghana’s internal challenges threaten to sideline its producers from the financial benefits of this rally. As global cocoa prices continue to rise, Ghana must act decisively to address election-related disruptions and secure its place as a leader in the international cocoa trade.
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