Ghana has raised the fixed farmgate price paid to cocoa farmers by nearly 45% to help boost their incomes and deter bean smuggling, Agriculture Minister Bryan Acheampong said on Wednesday.
Reuters reported earlier this month that Ghana’s cocoa producer price review committee would raise the price from 33,120 cedis per metric ton to 48,000 cedis ($3,070) for the 2024/25 season, in line with the price announced by the minister.
The price increase is unprecedented and will take effect from Wednesday, Acheampong told reporters at the launch of the world’s second biggest producer’s 2024/25 cocoa season.
Global cocoa prices have been buoyant this year as disease and adverse weather in Ghana and Ivory Coast, which supply more than 60% of the world’s cocoa, the main ingredient in chocolate, pushed the market to a third successive deficit.
A similar price increase could be implemented in Ivory Coast next month since the two countries coordinate farmgate prices and cocoa supplies to help sustain the sector and boost their farmers’ incomes.
“We don’t expect any huge gap in prices. The market is volatile, we continue to monitor it and in the event that there’s an increase in price, I think both countries will have a discussion,” Acheampong said.
A cocoa hedge fund manager said the new price “implies a market value for Ghana of about $4,715 a ton whereas Ghana (futures plus differentials are) trading at about $10,000”.“You will see a lot of smuggling. The Cocobord is making the farmers, once again, subsidize their problems,” he added.
Ghanaian cocoa farmers have said they expect a boost in crop output in the 2024/2025 season thanks to improved weather and some farms rehabilitated after diseases and illegal gold mining.
Acheampong said he now expects cocoa production to exceed the previous target of 650,000 metric tons, which is now seen as too conservative.
He added that Ghana’s cocoa marketing board Cocobod has enough funds to buy crop from farmers this season before the government manages to raise a syndicated loan, which is expected to bring in no more than $600 million.
Sources told Reuters last month that Cocobod was working on a new funding model for bean purchases. This will help save it over $150 million in interest payments.
In the previous season, the increase in the farmgate price did not reflect the increase of global prices, pushing some cocoa farmers to sell their beans to increasingly sophisticated smuggling rings.
($1 = 15.6500 Ghanian cedi)
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