The cocoa sector continues to face complex and intensifying challenges that are reshaping the global market landscape, particularly in major producing countries like Ghana and the Ivory Coast. Unfavorable weather conditions and the spread of crop diseases have reduced yields, straining the availability of cocoa beans and the livelihoods of farmers. With global cocoa demand steadily rising, supply constraints have fueled consistent price increases from the farmgate to international markets.
Figure 1: ICCO Cocoa Prices
To address these pressures, Ghana and the Ivory Coast have implemented significant hikes in farmgate prices. Ghana recently raised its farmgate price twice in the 2024/25 season. Ghana, the world’s second-largest cocoa producer, initially raised the state-guaranteed cocoa price by more than 50% from USD 1.58 per kilogram (GHS 21.00/kg) to better distribute the gains from rising global cocoa prices and deter bean smuggling. However, local farmers’ losses persisted despite the hike, prompting the Ghanaian government to raise the fixed farmgate price once more this 2024/25 season. Farmers will now receive USD 3.06/kg (GHS 49.6/kg), an increase from the USD 2.99/kg (GHS 48.00/kg) price set at the season’s start in Sep-24. This move aims to provide relief to cocoa farmers and curb widespread smuggling, reportedly costing the Ghanaian sector more than a third of its 2023/24 output.
According to the Ghana Cocoa Board (COCOBOD), Ghana's cocoa marketing board, the recent price hike is set to take effect immediately, as anticipation of this increase had led some farmers to hoard beans in Oct-24, contributing to a potential squeeze on global supplies. The government aims to boost farmer incomes while discouraging smuggling, further impacting an industry already hit by its lowest production in over two decades. In turn, these conditions have driven global cocoa prices to historic highs.
The Ivory Coast adopted a similar approach, with its cocoa regulator, the Coffee and Cocoa Council (CCC), raising the farmgate price by 50% to USD 2.42/kg (CFA 1,500/kg) as of Apr-24. This policy mirrors Ghana’s approach, aiming to mitigate farmers’ losses and sustain production amid ongoing supply pressures.
Figure 2: Cocoa Farmers in the Bia District of Western Ghana
However, these price adjustments are unlikely to fully alleviate the sector's structural issues. Persistent problems, such as plant diseases, climate variability, and farmer access to agricultural resources, continue to hamper productivity and could lead to further price volatility if not addressed. While higher farmgate prices may incentivize farmers to reinvest in crop maintenance, the immediate obstacles to increasing yields remain substantial. These challenges highlight the need for sustainable solutions, such as improved disease-resistant cocoa varieties, enhanced farming practices, and more resilient agricultural infrastructure, to secure the sector's future.
Looking forward, the cocoa market is expected to remain bullish, with prices likely to stay elevated as supply constraints persist. If crop health issues and unfavorable weather conditions continue to impact production, further price increases may be anticipated. In this evolving landscape, both cocoa producers and global consumers may face prolonged price fluctuations. As governments and industry stakeholders seek to address the systemic challenges, the outlook remains cautiously optimistic but highlights the pressing need for sustainable solutions to stabilize supply and support the livelihoods of those who rely on cocoa production.