Significant Decline in Ghana’s Cocoa Production: Key Insights and Implications

Ghana’s cocoa production has decreased by nearly 50% in three years, according to Finance Minister Dr. Cassiel Ato Forson. He highlighted supply issues, mismanagement, and financial losses, with COCOBOD’s debt reaching GH¢32 billion. The government aims to address these challenges through a new economic policy.

Ghana has experienced a significant decline in cocoa production, dropping by nearly 50 percent over the past three years, as highlighted by Dr. Cassiel Ato Forson, Minister of Finance. During the recent presentation of the 2025 Budget and Economic Policy Statement in Parliament, he noted that cocoa, a vital component of the Ghanaian economy, has failed to adequately support economic growth, despite rising world market prices.

The Minister expressed concern that COCOBOD could not supply the expected 330,000 tonnes of cocoa in the 2023/2024 crop season, leading to the rollover of several supply contracts to 2025. He attributed the dire situation to significant mismanagement within the cocoa sector, which has caused it to falter even in the face of historically high market prices.

Regarding financial implications, Dr. Forson warned that the rolled-over contracts could incur an additional loss of $495 million in 2025. He further elaborated that each tonne delivered this year under these contracts would result in a revenue loss of $4,000 for both COCOBOD and Ghanaian farmers.

The outstanding debt of COCOBOD has reached GH¢32 billion, with GH¢11.92 billion due in 2025. Additionally, the outstanding cocoa road contracts total GH¢21 billion, of which only GH¢4.4 billion has been accounted for. The Minister pointed out the adverse effects of forward sales contracts locked in at lower prices, resulting in $840 million of revenue losses and leaving farmers impoverished.

He also identified threats to the industry, including market price differentials and smuggling, caused by discrepancies between market rates and farmer payments. Despite these challenges, Dr. Forson affirmed the government’s commitment to addressing these issues, outlining plans for the 24-Hour Economy policy to boost economic growth and job creation, which will be presented to Parliament.

In conclusion, Ghana’s cocoa sector faces severe challenges, with a substantial 50 percent decline in production over three years. Mismanagement, debt issues, and financial losses from rollover contracts threaten the industry, which is critical to the national economy. The government’s commitment to implement policies aimed at revitalizing the cocoa sector and the wider economy is crucial for sustainability and growth moving forward.

Original Source: www.ghanabusinessnews.com