As supplies tighten, President Nana Akufo-Addo said farmers would receive 20,943 Ghana cedi per tonne from the start of the season, which starts 1 October, compared with 12,800 Ghana cedi they earned last year.
He told local media the new price was the highest paid to farmers across West Africa in more than 50 years. The rise comes as cocoa futures have hit 46-year highs in recent weeks over concerns over tight supplies from the region, where approximately 70% of the world’s cocoa is sourced.
"With the predicted stable prices... the government will continue to honour our farmers with good prices in the years ahead," he told a group of farmers in the Tepa cocoa-growing district.
Ghana is the second largest cocoa bean supplier after Cote d’Ivoire but a weakened cedi currency and a lower farmgate cocoa price in Ghana in the 2022- 2023 season, compared with its neighbour, saw beans smuggled into the country as well as Togo.
“The smuggling contributed to a lower than expected total output from Ghana, forcing the government to close the season a month earlier than expected and bring forward the start of the new season to September instead of October,” Reuters reported.
Speaking at local media, President Akufo-Addo said that, until recently, international prices of cocoa had remained very low and made worse by COVID-19, adding that, despite this, COCOBOD [The Ghana Cocoa Board] and the government have been taking the tough decision of increasing producer price of cocoa.
“Cocoa prices have increased from seven thousand, six hundred cedis (GH¢7,600) per tonne in 2016 to twelve thousand, eight hundred cedis (GH¢12,800) in 2022, a significant increase of sixty-eight percent (68%). This has had an adverse impact on COCOBOD’s financial performance,” President Nana Akufo-Addo said.
In London, cocoa futures on ICE rose to a new 46-year high on Friday (8 September), up 73 pounds, or 2.5%, at 3,050 pounds per metric ton after touching the highest since 1977 at 3,053 pounds ($3,805), due to lower-than-expected production in Ghana helped to tighten global supplies.
The market predicts that cocoa output from Ghana is expected to be around 11% lower than a 750,000 metric ton target in the current 2022-2023 season due to smuggling issues, and dealers noted ongoing crop issues, including black pod disease, in West Africa could lead to a third successive global deficit in the 2023-24 season which begins at the end of this month.
Reuters said the market has been setting fresh highs since late June, as the crop problems in West Africa contribute to a substantial global deficit expected in the current 2022-23 season.
Cameroon, another main West African cocoa producer and the world's fourth most significant, also raised its farmgate cocoa price by 25% to around 1,500 ($2.45) CFA franc per kg for the 2023-2024 season.
A Reuters poll of traders and analysts issued in late August had a median forecast of a deficit of 173,000 metric tons in the 2023-24 season.
The International Cocoa Organization (ICCO) said in its August Bulletin for August 2023, released on Friday, 8 September, that cocoa prices, in turn, have garnered more support from the combination of the current cocoa supply and demand situation and are hovering at high levels.
“A turnaround in grinding activities in origin countries has supported the growth in global grindings. Nevertheless, this is not enough to offset the negative grindings in the traditional consuming regions,” it said
An observation pointed out in the Bulletin is that there are more exports of semi-finished products from top-producing countries to Europe, Southeast Asia, and North American Free Trade Agreement (NAFTA) countries.