The market has reacted to poor crop harvests in West Africa with the risk of El Nino weather conditions affecting concerns of a global cocoa deficit for the third consecutive year.
As cocoa reached its highest level on the commodities markets since 1978, there are also reports of Ghana’s cocoa farmers claiming they have not been paid by Cocobod, the county’s regulatory body, exasperating an already severe situation after some companies were accused of not paying the full price to farmers for their cocoa.
According to ghanaweb.com, the farmers say the board has not treated them fairly. The farmers are obliged by law to sell their beans to Cocobod, but it has not paid them. Cocobod has been losing money for the past six years, and the Ghana National Cocoa Farmers Association fears that some of its members might be forced to smuggle their remaining beans into neighbouring Cote d’Ivoire to sell them.
Reuters has reported Cocobod is still trying to secure a loan to pay for the 2023-24 crop; in the past, it has borrowed money from cocoa traders to pay for its purchases.
Meanwhile, the tightening supply of cocoa is mainly attributed to lower crop yields in Ghana and Cote d’Ivoire, the two largest cocoa producers. The reduced harvests have been a factor in supporting the surge in prices.
While the big chocolate companies, such as Mondelez International, have increased prices on some of their products due to the soaring costs of cocoa and sugar, farmers struggle to make a decent living.
Last week, the chocolate industry was called to account following reports in ConfectioneryNews and other media on allegations it is refusing to pay contracts at the current market price plus the Living Income Differential (LID) for farmers in Ghana and Cote d’Ivoire, despite promising to do so.
With skyrocketing cocoa prices in New York, price hikes by major companies in the industry are just one consequence. The long-term effects could also have an impact not only on the farmers but also on producing countries and consumers.