The producer price of cocoa has been increased by 58.26 percent from GH¢20,928 per tonne to GH¢33,120.00 per tonne for the rest of the 2023/24 cocoa season. The new rate took effect Friday, 5th April 2024.

This increase translates into GH¢2,070 per bag of 64 kg gross weight.

This, according to the Ghana Cocoa Board (COCOBOD), has become necessary to enhance the income of cocoa farmers in response to the rising prices of cocoa on the international market.

The review of the producer price for the rest of the 2023/24 crop year follows the government’s consultation with stakeholders in a bid to “neutralise” the impact of Ivory Coast’s price hike, given its potential impact on smuggling.

“The increase in the producer price of cocoa has become necessary to enhance the income of cocoa farmers in line with the vision of the government and in response to the rising prices of cocoa on the international market,” the regulator said in a statement.

The government has also approved a review of the buyers’ margin to GH¢2,980.00 per tonne for the rest of the 2023/24 cocoa season. This increase is expected to cushion the LBCs against the increase in finance cost due to an increase in the producer price of cocoa.

A report by Reuters suggests that several licensed cocoa buyers deemed the increment as long overdue although this will increase their cost of operations.

Cocoa production in Ghana, the world’s number two producer, has suffered multiple challenges over the past four years, with output expected to be almost 40 percent below target in the 2023/24 season due to strong winds, scant rain, smuggling and disease. It is expected that Ghana’s 2023/24 cocoa harvest will be only 422,500 MMT to 425,000 MT, half the country’s initial forecast and a 22-year low, as extreme weather and disease decimated the cocoa crop.

The regulator said the cocoa swollen shoot virus, which causes yields to drop and kills cocoa trees, wiped off about 590,000 hectares of farmland between 2018 and February 2024.

COCOBOD has also noted that it lost about 150,000 tonnes of cocoa beans to smuggling and illegal gold mining known locally as galamsey in the 2022/23 season. It now expects even greater losses this season as rising global cocoa prices create a greater incentive.

High cocoa prices continue to make headlines. The cocoa market review for February 2024 by the International Cocoa Organization indicates that the recent supply shortfall from Côte d’Ivoire and Ghana is taking a toll on both markets across the Atlantic. Since the start of the season, arrivals at Ivorian and Ghanian ports are down respectively 28 percent and 35 percent from the same period last season.

Unfavourable growing conditions and crop disease on West African farms over the past year have curbed cocoa production and fuelled a parabolic rally in cocoa prices. A global cocoa deficit is expected to extend into 2023/24 since current production is insufficient to meet demand. Also, cocoa prices are seeing support from the current El Nino weather event after an El Nino event in 2016 caused a drought that fuelled a rally in cocoa prices to a 12-year high.