Mon, July 22, 2024

Ghana’s 2024 Cocoa Crisis: Prices Double, Yields Halve

African cocoa laborers earn less than a dollar a day, ghana

Quick Look:

  • Ghana’s cocoa production will drop sharply in 2024, delaying deliveries and doubling global cocoa prices.
  • Only 435,000 tons of cocoa will be delivered out of 785,000 tons pre-sold for the 2023/24 season.
  • Cocoa bean prices more than doubled in 2024, spiking the price of chocolate significantly.

Ghana, a major player in the global cocoa market as the second largest producer, is experiencing a profound supply crisis in 2024. This crisis stems from poor crop yields, resulting in delayed cocoa deliveries and a sharp increase in cocoa prices worldwide. This article delves into the key events, price changes, production data, factors causing the crisis, and the impact on cocoa processing within Ghana.

Due to suboptimal crop conditions, Ghana is compelled to postpone the delivery of up to 350,000 tons of cocoa beans to the following season. This decision underscores the severity of the current agricultural challenges facing the country. The global cocoa market has been significantly impacted, with chocolate manufacturers raising prices. In 2024, cocoa prices more than doubled, a reaction to the consecutive years of poor harvests in Ghana and Ivory Coast.

Pre-Sold Ghana’s Cocoa Shortfall: 350,000 Tons Below Target

Ghana had pre-sold 785,000 tons of cocoa for the 2023/24 season. However, the anticipated delivery is now only 435,000 tons, highlighting a substantial shortfall and exacerbating market uncertainties. The previous season saw Ghana’s cocoa production dip to 670,000 tons. Projections for the current season are even more dire, with expectations falling below 500,000 tons. This reduction significantly differs from usual production levels, which typically range between 750,000 and 850,000 tons.

Forward sales for the next season have also plummeted, with Ghana selling only 100,000 tons. This figure is notably lower than usual, reflecting the pervasive uncertainty and lack of confidence in future yields. Cocoa processing companies within Ghana are grappling with reduced production levels due to the decreased supply of cocoa beans. This has led to underutilised machinery, inefficiencies, and increased operational costs, further straining the local cocoa industry.

Cocoa Prices Double in 2024: Impact on Chocolate

The impact of the cocoa crisis on prices has been profound. The value of cocoa beans has more than doubled in 2024, a direct consequence of the supply shortfall. The price of a 100g bar of Kingsbite chocolate has surged from GHS 14 to over GHS 20, reflecting the increased costs of raw materials. The production figures paint a grim picture of the current state of Ghana’s cocoa industry.

Ghana pre-sold 785,000 tons for the 2023/24 season, but the expected delivery is 435,000 tons. In contrast to the usual crop totals of between 750,000 and 850,000 tons, last season’s crop was 670,000 tons, with the current season expected to fall below 500,000 tons. Globally, cocoa production has fallen by 10.9%, totalling 4.45 million tons.

Weather, Disease, and Mining: Key Factors Driving the Crisis

Several factors have contributed to the current cocoa crisis in Ghana. Unpredictable and extreme weather patterns have negatively impacted cocoa yields. Diseases affecting cocoa beans, such as the swollen shoot virus, have reduced the quality and quantity of the crop. Activities related to illegal gold mining have encroached on cocoa farmlands, reducing the area available for cultivation. Continued unfavourable weather has compounded the difficulties cocoa farmers face, and the prevalence of swollen shoot disease has further decimated cocoa plantations, leading to significant losses.

The reduction in the cocoa bean supply has severely affected cocoa processing in Ghana. Due to insufficient raw materials, local processing firms have been forced to reduce production levels. Underutilisation of processing machinery has led to inefficiencies and higher costs. Disruptions in processing schedules have become commonplace, complicating operations. There has been a 30% decline in the production of cocoa products, with processed cocoa bean production falling by 50%, from 3,000 to 1,400 metric tonnes. The financial repercussions include a loss of US$ 6 million in the first quarter of 2024.

Smuggling and Land Sales: Fallout from Ghana’s Cocoa Crisis

The cocoa crisis has also led to several additional issues. There has been increased cocoa smuggling to neighbouring countries, driven by better prices and conditions elsewhere. Farmers are selling their land for as low as GHS 50,000, seeking alternative livelihoods due to the failing cocoa industry. The crisis has resulted in job losses and the looming threat of shutdowns in cocoa processing companies, further exacerbating the economic fallout.

Ghana’s cocoa crisis of 2024 has far-reaching implications, both locally and globally. The convergence of adverse weather, diseases, and economic challenges has severely disrupted the supply chain, leading to significant price increases and operational difficulties. Addressing these issues will require concerted efforts from stakeholders at all levels to stabilise and revitalise the cocoa industry in Ghana.

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