Ghana’s president warns of a $1.3 billion revenue gap for Cocobod due to advanced contracts amid financial challenges. Cocobod faces significant debts as Ghana navigates a cost of living crisis. Despite improvements in cocoa yield forecasts, high operational costs are pressuring demand and sales in the chocolate sector.
The Ghanaian president, John Mahama, has warned that the country’s cocoa body, Cocobod, is likely to experience a revenue shortfall of approximately $1.3 billion due to advanced contracts. This situation arises amidst significant financial challenges facing Ghana, particularly a severe cost of living crisis. Currently, Ghana is tasked with repaying total debts of $8.7 billion, which includes $2 billion owed to Cocobod, which itself has notable financial struggles amounting to 32.5 billion cedis, equivalent to $2.1 billion.
During his address, President Mahama pointed out that Cocobod was unable to deliver 333,767 metric tons of cocoa at £2,600 per ton for the 2023/2024 season, leading to the rollover of these contracts into the next season. He noted, “This implies that for every ton of cocoa delivered this year, in fulfillment of the rollover contract, Cocobod and Ghanaian farmers will lose $4000 in revenue, and Cocobod will lose another $495 million by the time the board finishes supplying the remaining contracts.”
Mahama’s remarks highlighted concerns that Cocobod failed to capitalize on soaring futures market prices that reached $12,000 per ton in the past two years, as current trading prices now sit between $7,000 and $8,000 per ton. Despite these pressures, market indicators suggest that cocoa prices may be stabilizing following a prolonged period of volatility. Recent reports from the International Cocoa Organization (ICCO) reveal a possible surplus of 142,000 tons for the 2024/2025 season, contrary to earlier market expectations of ongoing supply issues.
The ICCO reported improved output from cocoa-producing nations, with arrivals in Côte d’Ivoire increasing by 14.8% as of March 2025 compared to the previous year. Additionally, Ghana’s graded and sealed cocoa in warehouses exceeded the production estimate for the 2023/2024 season.
However, demand for cocoa, particularly for premium chocolate products, has declined. Major manufacturers have voiced concerns, with Mondēlez indicating “unprecedented cocoa cost inflation” affecting their operations. Hershey reported anticipated pressure on its 2025 earnings due to high cocoa prices, which may drive manufacturers to raise product prices, potentially reducing sales volumes. Furthermore, consumer purchasing behavior has shifted as households navigate budget constraints, contributing to a slowdown in specific confectionery categories. The ICCO also mentioned that the potential introduction of tariffs presents additional uncertainty in the cocoa market, accustomed to various shocks in recent years.
In summary, the Ghanaian cocoa sector faces significant financial hurdles, with President Mahama highlighting Cocobod’s expected $1.3 billion revenue gap due to advanced contracts. While market trends suggest a potential surplus in cocoa production, the industry grapples with high operational costs, leading to increased input prices and altered consumer purchasing behaviors. The implications of these challenges portend a complex landscape for Ghana’s vital cocoa sector, demanding careful navigation amid ongoing financial pressures and uncertainties.
Original Source: www.confectioneryproduction.com
