The Ghanaian cocoa sector faces severe challenges highlighted by Finance Minister Dr. Cassiel Ato Forson, including a debt of 32 billion Cedis and a near 50% decline in production. This crisis is exacerbated by unsustainable financial practices, market disparities, and mismanagement. The Minister has called for urgent reforms to address these fiscal risks and ensure the sector’s sustainability.
On March 11, Ghana’s Finance Minister, Dr. Cassiel Ato Forson, presented the 2025 Budget and Economic Policy to Parliament, themed “Resetting Ghana for the economy we want.” He underscored critical fiscal challenges facing the cocoa sector, revealing that COCOBOD’s outstanding debt currently stands at 32 billion Cedis.
Dr. Ato Forson lamented that Ghana’s cocoa sector, historically vital to the nation, is faltering due to poor management. He stated, “The cocoa sector, which has long been the backbone of the Ghanaian economy, is sadly on its knees owing to gross mismanagement in the last few years and is now unable to support the economy as it should despite record-high world market prices.”
The Minister also reported a nearly 50% decline in cocoa production over the last three years, resulting in COCOBOD’s inability to fulfill its contractual commitments in the 2023/2024 crop season. This has created a shortfall of approximately 330,000 tonnes, which has been postponed to future supply cycles.
Additionally, Dr. Ato Forson highlighted the adverse effects of contract sales locked in at lower prices than current market rates, which have led to revenue losses of US$840 million for COCOBOD, adversely affecting farmers across Ghana. He remarked, “These 2023/24 forward sales contracts locked-in at lower prices than current market rates have resulted in revenue losses.”
The sector is further burdened by severe financial challenges, including unsustainable debt and quasi-fiscal expenditures on cocoa roads, which are outside COCOBOD’s core operations. The Minister stated that COCOBOD’s liabilities, including 11.92 billion Cedis due for payment in 2025 and cocoa road contracts totaling 21 billion Cedis by 2024, negatively impact the sector’s financial health.
In addition, cocoa production is threatened by market price irregularities and smuggling, driven by the disparity between market rates and farmers’ payments. This disparity poses significant risks to the industry’s long-term viability.
To mitigate these issues, Dr. Ato Forson called for necessary reforms. He remarked, “This situation underscores the need for reforms to address these fiscal risks and ensure the sector’s viability.”
The Ghanaian cocoa sector is currently under significant strain due to mismanagement, high debt levels, and declining production. With the Finance Minister calling attention to unsustainable financial practices and the urgent need for reform, stakeholders are urged to address these issues to sustain this critical sector’s viability and support the agricultural economy.
Original Source: www.gbcghanaonline.com
