Ghana’s President Mahama announced a $1.3 billion revenue gap for Cocobod due to economic crises and confirmed debts of $8.7 billion. Cocobod is rolling over contracts leading to significant revenue losses. While a production surplus is anticipated for the upcoming season, high cocoa prices are dampening demand and straining manufacturers.
Ghana’s President John Mahama reported a projected $1.3 billion revenue gap for Cocobod, the country’s cocoa agency, due to ongoing economic challenges and a significant cost-of-living crisis. The nation faces steep debts totaling $8.7 billion, including $2 billion owed to Cocobod, which is itself in a precarious financial situation.
In the 2023/2024 season, Cocobod fell short by 333,767 metric tons of cocoa, which was sold at £2,600 per ton. The management decided to roll over these unfulfilled contracts to the 2024/25 season, causing potential revenue loss of $4,000 per ton for cocoa delivered this year. President Mahama highlighted that this situation reflects Cocobod’s failure to capitalize on high market prices, which reached up to $12,000 per ton in recent years but have settled around $7,000 to $8,000.
Despite these challenges, recent market data indicate a potential surge in cocoa production. The International Cocoa Organization (ICCO) predicts a 142,000-ton surplus for the 2024/2025 season, driven by earlier investments in cocoa farms. Increases in cocoa arrivals in top producer Côte d’Ivoire and rising stockpiles in Ghana signal a rebound in production, surpassing last year’s estimates.
However, elevated cocoa prices are straining demand, particularly for premium chocolates. Major manufacturers such as Mondēlez and Hershey are facing operational cost inflation, prompting fears about the impact on earnings due to increased ingredient costs. Consequently, consumers are responding to budgetary constraints by becoming more selective, affecting sales volumes across various confectionery categories. The ICCO urges caution due to market uncertainties, including potential tariffs that could disrupt stability in the cocoa market.
In summary, Ghana’s cocoa industry is grappling with significant revenue losses estimated at $1.3 billion, alongside mounting debts. While a potential rebound in production could bring a surplus for the 2024/2025 season, challenges from high input costs are impacting demand. Cocoa prices remain a critical concern as manufacturers adjust to economic pressures, affecting consumer purchasing behavior. The industry must navigate these complexities to regain stability.
Original Source: www.confectioneryproduction.com
