Dropping Cocoa Prices: Sweet for Consumers, Bitter for Farmers

With Valentine’s Day approaching, the prices of fancy chocolates and flowers skyrocket with the sudden influx of lovers demanding these goods to gift to their partners. In Ghana – the world’s second largest producer of cocoa – unpaid cocoa farmers are finding it difficult to put food on the table and pay for their children’s schooling.

In 2024, Ghana ranked 81 out of 193 in terms of GDP, with most of its trade (16B) dependent on the export of gold (5.90B), cocoa (1.46B) and crude petroleum (3.74B). This makes Ghana’s economy heavily dependent on primary sector goods, such as gold, cocoa and manganese ore.

Instead of growth being driven by manufacturing or high value services in the tertiary or quaternary sector, a substantial portion of Ghana’s national income is tied to the extraction, growth and export of raw materials. While these commodities generate an essential and substantial foreign exchange and government revenue, their prominence exposes structural vulnerabilities in the Ghanaian economy.

Cocoa production introduces a significant layer of uncertainty. Cocoa yields are inherently sensitive to unmanageable factors beyond direct human control—weather variability, soil conditions, pest infestations, rainfall patterns, and the broader effects of climate change. A single season of drought, excessive rainfall, or disease outbreak can sharply reduce output, disrupt export revenues, and strain economic stability. Because global commodity prices are also volatile, Ghana faces a dual exposure: fluctuations in both production volume and international market prices.

Prices for cocoa beans have come down since a historic high in 2024 – exceeding 12,000 per metric tonne. Demand has slumped as cocoa grindings have gone down globally; declining by -7.2% year after year in Europe. Switzerland is the largest export destination for Ghanaian cocoa, making up 26.7% of Ghana’s total exports. With the slump in demand from their largest export destination, Ghanaian farmers are finding it difficult to sell their increasing cocoa stocks. With more than 50,000 metric tonnes of unsold cocoa beans at ports, farmers growing and delivering these beans have not seen the remuneration for their hard work. 

Thus, as Ghana is dependent on primary products, the Ghana Cocoa Board (COCOBOD) strategically manages futures contracts and forwards sales to minimise the risk related to price volatility.

A futures contract is an agreement to sell a commodity, in this case cocoa, at a predetermined price at a specified date in the future. Selling a large portion of its expected cocoa harvest at fixed prices agreed upon in international markets (linked with London and New York cocoa exchanges). The intercontinental exchange’s cocoa contract is a world benchmark for the global cocoa market, pricing the physical delivery of exchange-grade cocoa beans. Ghana falls under the Group A (deliverable at a premium of $160/ton) includes the cocoa growths of Ghana, Ivory Coast, Nigeria, Sierra Leone and Togo. By locking in and pre-selling cocoa at an agreed price, Ghana reduces uncertainty, even if global cocoa prices fall later, the country still receives the contracted price.

Despite the precautions, farmers are now feeling the 70% plunge in New York’s cocoa futures. Due to the lowered demand for cocoa and decrease in cocoa grindings globally, farmers are finding it difficult to access buyers, with a significant unsold stock of cocoa beans being stored. Due to the perishable nature of the beans – which can only be stored for 6-12 months in hot, humid countries – farmers are antsy to sell and are finding it difficult to receive remuneration for their growths.

Ghana’s farmgate prices set by COCOBOD was previously 58,000 cedis a ton. With the new slump in cocoa futures, COCOBOD has set a new price of 41,392 cedis mid 2025/26 season. This is meant to keep prices of cocoa relatively lower and boost competitiveness as the previous dear cost on cocoa beans have made Ghana’s cocoa uncompetitive and undesirable.

The switch has created payment delays which has left the 80,000 farmers supported by the cocoa industry without pay for their children’s school fees, food and farming equipment. This change in prices have created a shock in the cocoa farmers’ livelihoods significantly. As cocoa prices are always reviewed before a season and not during, when farmers have already begun and started investing heavily into their farms and cocoa growing equipment for the season.

Beyond meeting day-to-day needs, the complete lack of compensation limits the farmers’ ability to reinvest into their cocoa farms. This means an inability to purchase new seeds, fertilisers and soil cultivators; and an inability to replace or upgrade any broken equipment. Without the financial means to make these investments, farm output declines, soil quality may deteriorate, and innovation stagnates. Over time, this weakens the cocoa industry which supports a significant portion of the Ghanaian economy and undermines long-term agricultural development.

When farmers cannot sustain their cocoa production, the stability and growth of Ghana’s second largest export is at serious risk. Reduced productivity, declining quality, and disincentivized labour threaten supply chains, export revenues, and the broader economy that depends on this sector. As the second largest producer and one of the largest exporter of cocoa beans, industries overseas reliant on the supply of cocoa beans will eventually suffer as well. As the new pricing makes it riskier to invest heavily into cocoa farms, this may disincentivise future farmers and even push current farmers out of the market.