Inherited Pricing Missteps, Liquidity Gaps Push Cocoa Sector into Crisis — Ato Forson

Ghana’s cocoa sector is facing a cash squeeze driven by inherited pricing distortions, weak liquidity buffers and uncompetitive market positioning, Finance and Economic Planning Minister Dr. Cassiel Ato Baah Forson has revealed.

Speaking at a news conference after an emergency Cabinet meeting convened to stabilise the cocoa industry, Dr. Forson said government’s assessment traced the sector’s current stress to pricing decisions taken at the start of the 2025/2026 cocoa season, compounded by adverse exchange rate movements and weak price risk management.

The Minister explained that the season opened in August 2025 with a producer price of GH¢51,660 per tonne, pegged at 70 percent of gross FOB, based on an assumed world price of US$7,200 per tonne and an exchange rate of GH¢10.25 to the dollar.

That pricing benchmark quickly became untenable.

On October 1, 2025, Côte d’Ivoire raised its producer price by 20 percent, triggering a sharp price differential between the two largest cocoa producers. Coupled with a weakening cedi, the gap exposed Ghana to heightened risks of cross-border cocoa smuggling, threatening volumes and foreign exchange inflows.

In response, Ghana’s Producer Price Review Committee (PPRC) revised the producer price upward to GH¢58,000 per tonne, reflecting a new exchange rate of GH¢11.5 to the US dollar. The adjustment narrowed the price gap and helped stem smuggling, but significantly raised Ghana’s cost base.

Shortly after the upward review, global cocoa prices began to decline.

Despite the downturn, COCOBOD continued selling cocoa at prices below US$6,400 per metric tonne, which the Minister said represents the full cost of moving cocoa from farm gate to port. The result was sustained trading losses at a time when international buyers were increasingly unwilling to absorb Ghana’s higher-priced beans.

“Ghana’s cocoa became uncompetitive relative to supplies from other origins selling at significantly lower prices,” Dr. Forson noted.

The financial strain was exacerbated by acute liquidity constraints at COCOBOD. According to the Minister, the cocoa regulator lacked the funding capacity to purchase beans from farmers, hold inventory, or deploy hedging strategies to manage price volatility.

He attributed the liquidity shortfall to financing and inventory challenges carried over from 2024, leaving COCOBOD without the flexibility needed to respond to shifting global market conditions.

Cabinet, Dr. Forson said, has identified the underlying structural weaknesses and is working on a recovery framework aimed at restoring liquidity, strengthening price risk management, and re-establishing Ghana’s competitiveness in the global cocoa market.

Cocoa remains a cornerstone of Ghana’s export earnings and rural livelihoods. But the Minister’s assessment underscores a central reality: pricing decisions unsupported by liquidity buffers and risk management tools have left the sector exposed to global price swings, pushing an already fragile system into crisis.

 

 

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