The world’s second-largest cocoa producer, Ghana, is planning to postpone the delivery of up to 350,000 tons of beans to the next season due to poor crop yields, five sources informed Reuters. This decision is expected to further strain the global chocolate industry.
Chocolate manufacturers worldwide are already increasing prices for consumers after cocoa prices more than doubled this year, driven by a third consecutive year of poor harvests in both Ghana and Ivory Coast, which together account for 60% of global cocoa production.
Earlier market estimates suggested that Ghana would carry over around 250,000 metric tons of cocoa, approximately half of its current crop.
The country’s cocoa crop has been devastated by adverse weather, bean diseases, and illegal gold mining, which often displaces cocoa farms.
Ghanaian farmers are also smuggling more beans to neighboring countries to sell them at higher prices than the state purchasing price, further reducing the available crop for delivery in Ghana.
Ghana typically sells about 80% of its crop one year in advance, usually amounting to 750,000-850,000 tons.
However, last season’s crop fell to around 670,000 tons and is not expected to exceed 500,000 tons this season. Traders and the industry fear it might not recover significantly next season either.
The International Cocoa Organization forecasts global cocoa production to drop by 10.9% to 4.45 million tons this season.
As a result, processors and chocolate companies will need to rely on cocoa stocks to meet their needs.
The price surge is disrupting a long-established mechanism for cocoa trade.
Authorities in Ghana use the average of their forward sales to set the minimum price at which traders can purchase cocoa from farmers the following season.
With approximately 350,000 tons of forward-sold beans missing from this season’s crop, Ghana is struggling with forward sales for next season, traders reported. Two sources indicated the country has sold forward just 100,000 tons.
Sources stated that the 100,000 tons, like the 350,000 tons being carried over into next season, were sold at less than half of current world cocoa prices, meaning COCOBOD will find it difficult to increase farmer prices next season based on these sales.
COCOBOD claimed forward sales were progressing as usual but declined to disclose volumes or prices.
Failure to raise prices will likely tempt farmers to increase bean smuggling, grow other crops, or sell more of their farms to gold miners, the sources said.