By Samuel Lartey(Prof)
Ghana, the world’s second-largest cocoa producer, is grappling with a deepening crisis in its cocoa industry. In 2024, cocoa export earnings plummeted to $1.7 billion, the lowest in 15 years.
This stark decline, representing a 25.4% year-on-year drop, has far-reaching implications for Ghana’s economy, particularly given that cocoa has long been a cornerstone of the country’s agricultural and foreign exchange revenues. The urgent need to address this crisis cannot be overstated.
Tracing the Roots of the Crisis
Cocoa production in Ghana dates back to 1879 when Tetteh Quarshie introduced cocoa beans from Fernando Po (now Bioko in Equatorial Guinea). Since then, the industry has grown into a vital economic pillar, accounting for about 19% of Ghana’s total export earnings and employing approximately 800,000 farmers directly.
Historically, the Ghana Cocoa Board (COCOBOD) has managed the sector’s pricing, distribution, and sales to international markets, with the government securing syndicated loans annually to pre-finance cocoa purchases.
However, 2024 marks a troubling chapter in this legacy. Production has declined by over 11%, with illegal mining (galamsey), smuggling, and crop diseases taking a toll on yields. Smuggling, in particular, has surged due to higher farmgate prices in neighboring Côte d’Ivoire, which incentivizes Ghanaian farmers to divert their cocoa supply across borders for better earnings.
Economic Repercussions and a Looming Foreign Exchange Crisis
The fall in cocoa export earnings is a major blow to Ghana’s economy, which is already facing foreign exchange volatility, high inflation, and debt servicing challenges. Cocoa exports play a crucial role in stabilizing the Ghanaian cedi, providing forex inflows that support international trade and government revenue.
In 2023, Ghana secured a $1.13 billion syndicated loan for cocoa purchases, but with declining earnings in 2024, the country’s ability to meet future loan obligations is under threat.
Beyond foreign exchange concerns, this downturn affects government programs and national economic initiatives. The agricultural sector employs over 40% of Ghana’s workforce, meaning a collapse in cocoa production would exacerbate rural unemployment and economic hardship.
Ghana’s flagship Planting for Food and Jobs (PFJ) program, which aims to modernize agriculture and ensure food security, must now pivot to include sustainability measures for cocoa farming.
The Way Forward: A Quick Cure for a Deepening Crisis
A swift and strategic intervention is required to prevent further deterioration in Ghana’s cocoa sector. The government must enforce stricter regulations against illegal mining, enhance monitoring of cocoa trade routes, and implement a comprehensive sustainability strategy to modernize production. The following actions are paramount:
- Empowering Farmers Through Competitive Pricing and Financial Support
- Ghana’s farmgate price must be aligned with global market trends to discourage smuggling.
- Increased subsidies for fertilizers, irrigation systems, and disease-resistant cocoa seedlings will boost productivity.
Expanding Local Cocoa Processing for Value Addition
- Currently, only 20% of Ghana’s cocoa is processed domestically, limiting value retention.
- Investing in chocolate production and cocoa-based products could increase revenue and job creation.
- Strengthening Institutional and Trade Policies
COCOBOD must be restructured to improve efficiency, transparency, and farmer payments.
- Regional and international trade partnerships should be leveraged to diversify cocoa markets beyond traditional buyers like Europe and the United States.
- Integrating Cocoa Production with National Economic Initiatives
- Cocoa sector reform aligns with Ghana’s National Industrial Revitalization Program, aimed at increasing employment and foreign investment in agriculture.
- Government-backed insurance schemes for farmers could mitigate risks associated with climate change and pests.
Sustainability and Climate Resilience
- Climate change adaptation strategies, including agroforestry and shade-grown cocoa, can improve long-term sustainability.
- Partnerships with international environmental organizations could attract funding for reforestation and conservation projects.
- Impacts on Large, Medium, and Small-Scale Businesses
Revitalizing the cocoa industry will have positive ripple effects across Ghana’s economy. Large agribusinesses and multinational companies will benefit from a stable supply chain, encouraging investment and expansion. Medium-scale processors and chocolate manufacturers will have increased access to raw materials, boosting local industries.
Small-scale farmers and cooperatives, who form the backbone of the sector, will experience financial stability, social sector growth, and greater incentives to remain in cocoa production rather than turning to illegal mining.
The Road to Sustainability and Economic Stability
The cocoa crisis is a wake-up call for Ghana to diversify its agricultural economy and modernize production methods. The government’s intervention must be swift and decisive, focusing on structural reforms, enhanced market access, and farmer empowerment. If properly managed, this crisis could serve as a turning point, ushering in a new era of resilient, sustainable, and profitable cocoa farming that aligns with Ghana’s long-term economic ambitions.
Conclusion
Ghana has weathered economic challenges before, and this crisis should be no exception. The need for urgent action cannot be overstated. A multi-stakeholder approach, involving the government, private sector, farmers, and international partners, is essential to reversing the decline.
Innovation, investment, and strategic policymaking will define Ghana’s future in cocoa production. The country must move beyond dependence on raw cocoa exports and harness the full economic potential of the sector.
With bold leadership, strategic investment, and strong regulatory enforcement, Ghana can not only reclaim its global standing in cocoa production but also create a more sustainable and prosperous future for its farmers, businesses, and the entire nation. The time to act is now.
