Ghana’s cocoa sector is at risk of losing $1.3 billion due to outdated management and pricing structures. Farmers are struggling for better wages, necessitating structural reforms to ensure sustainability. Current cocoa pricing strategies are inadequate in adapting to market changes, threatening the viability of the industry and its reliance on living wages for farmers.
Ghana’s cocoa crisis necessitates substantial structural reforms to ensure the industry’s sustainability. Recently elected President John Mahama indicated that Cocobod, the regulator of Ghana’s cocoa sector, might face a projected loss of $1.3 billion due to delayed contracts during peak crop prices. This alarming revelation poses serious consequences for farmers striving for a living wage, a goal that now appears increasingly distant.
This substantial sum could significantly enhance regenerative agriculture programs and contribute to raising farmgate prices, which have not kept pace with global cocoa rates. Previously, cocoa futures traded at high prices of around $12,000 per ton but have since decreased to approximately $7,000-8,000 per ton, remaining substantially above two years ago.
The crux of the issue lies in the government-controlled system that manages cocoa production, originally intended to stabilize prices. Unfortunately, this framework is ineffectively designed to adapt to market fluctuations, given that cocoa is often sold a year in advance. Consequently, even though Ghana and Ivory Coast experienced slight pay increases, these were insufficient to secure a living wage within the sector.
Numerous experts emphasize that unless comprehensive restructuring occurs in the cocoa trading systems of West Africa, the future viability of the cocoa industry, which is vital for the confectionery sector, will come under serious threat.
In conclusion, Ghana’s cocoa industry faces critical challenges that require urgent structural changes to avoid significant losses and support farmer livelihoods. The government’s current management system, while intended to stabilize prices, falls short in adapting to market dynamics, leaving farmers without the necessary income. Comprehensive reforms are essential for the future sustainability of both the cocoa industry and the confectionery sector that relies on it.
Original Source: www.confectioneryproduction.com
