Cocoa production in Ghana has fallen by nearly 50% over the past three years, with COCOBOD unable to meet supply expectations. Dr. Cassiel Ato Forson attributed this decline to mismanagement. The financial burden includes $495 million in losses from deferred contracts and an outstanding debt of GH¢32 billion. The government plans to introduce measures aimed at revitalizing the sector.
Cocoa production in Ghana has experienced a dramatic decline of nearly 50% over the past three years, as confirmed by Dr. Cassiel Ato Forson, the Minister of Finance, during the presentation of the 2025 Budget. He noted that despite an increase in global market prices, the cocoa sector is struggling to sustain the economy, as COCOBOD was unable to provide the expected 330,000 tonnes for the 2023/2024 crop season, leading to some contracts being deferred to 2025.
Dr. Forson attributed the sector’s decline to severe mismanagement, emphasizing that cocoa, once a critical economic pillar, is now faltering. He highlighted that this mismanagement has created additional financial burdens, with rolling contracts potentially causing losses of $495 million in revenue in 2025. For every tonne of cocoa involved in these contracts, the loss incurred would be around $4,000 for both COCOBOD and Ghanaian farmers.
The Minister disclosed that COCOBOD’s debt has ballooned to GH¢32 billion, with GH¢11.92 billion expected to be due in 2025. Additionally, outstanding cocoa road contracts have reached GH¢21 billion ($1.3 billion), yet only GH¢4.4 billion has been accounted for in financial statements. The forward sales contracts secured at lower prices than current market rates have also compounded revenue losses, totaling $840 million.
Dr. Forson also warned about the issues of market price differentials and smuggling, which are exacerbated by the disparity between market prices and farmer payments. He assured that despite these challenges, the government remains committed to addressing and resolving sector issues. The administration plans to introduce a 24-Hour Economy policy designed to boost economic growth and job creation, with forthcoming presentations to Parliament planned.
The significant decline in Ghana’s cocoa production highlights critical management issues within COCOBOD and the sector’s inability to leverage high global prices to bolster the economy. With substantial debts and potential losses looming, the government’s commitment to tackling these challenges through new policies is essential for restoring sustainability to this vital sector.
Original Source: www.ghanabusinessnews.com
