Ghana’s President John Mahama revealed a projected $1.3 billion revenue gap for Cocobod, citing ongoing financial challenges in the cocoa sector, which includes a significant national debt of $8.7 billion. Although there are optimistic forecasts for a cocoa surplus, high prices and manufacturers’ cost pressures are impacting market dynamics and consumer behavior.
John Mahama, President of Ghana, highlighted a projected $1.3 billion revenue shortfall facing Cocobod, the country’s cocoa regulatory body. This announcement comes amidst Ghana’s ongoing financial struggles, including a significant cost of living crisis. Currently, Ghana is grappling with debts totaling $8.7 billion, which includes $4 billion owed to the electricity sector and $2 billion to Cocobod, which is itself in debt by 32.5 billion cedis ($2.1 billion).
In his address, President Mahama emphasized that Cocobod failed to supply 333,767 metric tons of cocoa during the 2023/2024 season, selling for £2,600 per ton. Consequently, the management rolled over these contracts into the 2024/25 season. Each ton of cocoa delivered will result in a loss of $4,000, leading to an estimated total loss of $495 million for Cocobod due to these contracts. He noted that Cocobod missed opportunities capitalize on peak market prices which reached $12,000 per ton over the past two years. Presently, prices are between $7,000 and $8,000 per ton, indicative of high current values compared to prior years.
Despite these challenges, there is some optimism in Ghana’s cocoa market. The International Cocoa Organization (ICCO) has forecasted a surplus of 142,000 tons for the 2024/2025 season following three years of deficits. Reports show that while Ivorian ports saw a 14.8% increase in cocoa arrivals by March 2025, Ghana reported nearly 550,000 tons of graded cocoa at warehouses, surpassing its total production for the 2023/24 season estimated at 530,000 tons.
However, manufacturers continue to face difficulties due to high cocoa prices and operational costs. Key industry players, such as Mondēlez, have experienced unprecedented inflation in cocoa costs, while Hershey anticipates that rising cocoa prices will considerably impact 2025 earnings. As a result, there is a shift in consumer behavior, with many opting for more selective purchasing amid tight household budgets, which has slowed certain categories within the confectionery market. Additionally, potential tariff introductions pose further uncertainty in a market already facing numerous shocks.
In summary, President Mahama’s announcement of a $1.3 billion revenue gap in Ghana’s cocoa sector underscores the financial challenges faced by Cocobod amidst a significant debt burden. While there exists a glimmer of hope with potential surplus production forecasts, rising cocoa prices and operational costs threaten to impact the confectionery market and consumer purchasing behavior. The interplay between cocoa supply, prices, and demand remains complex, necessitating careful monitoring going forward.
Original Source: www.confectioneryproduction.com
