Ivory Coast and Ghana, which together produce about half of the world’s cocoa, are currently grappling with a significant crisis in selling their cocoa beans and compensating farmers. This year, the two West African nations have been hit hard by a combination of abundant global harvests, a sharp decline in cocoa prices, and weakening demand from chocolate manufacturers. These factors have converged to create a challenging environment for the cocoa sector, raising concerns about the economic stability of both countries and the welfare of millions of farmers who depend on cocoa cultivation for their survival.
To fully grasp the roots of this crisis, it is important to understand the unique way cocoa is marketed in Ivory Coast and Ghana. Unlike many other commodities traded freely on the global market, cocoa sales in these countries are tightly controlled by government-appointed regulatory bodies. These regulators handle approximately 80% of the cocoa beans, selling them to international traders well in advance—often a year ahead. Based on these forward sales, they set a fixed price for farmers at the start of the cocoa season, which begins in October. This system is designed to provide price stability for farmers, who then sell their beans to local collectors at the predetermined rate. These collectors, in turn, pass the beans on to licensed buyers, who either sell directly to global traders or through local intermediaries.
The fixed price set in October typically covers the main cocoa crop harvested from October to March. The regulators usually adjust the price for the mid-crop harvested between April and September, which is generally considered to be of lower quality. Last October, Ivory Coast set the price for its main crop at roughly $5,000 per metric ton, while Ghana established a slightly higher price of nearly $5,300 per metric ton. However, the global cocoa futures market has experienced a drastic downturn, with prices plummeting to around $3,100 per ton—a loss of about 50% in value within the year alone. This steep decline has created a difficult situation for international cocoa traders who bought beans at the higher fixed prices but now face selling them at much lower market rates, resulting in significant financial losses. Consequently, many traders have halted purchases from these two countries, exacerbating the problem.
As a direct consequence, Ghanaian farmers have reported not receiving payments for their cocoa since November, and similar reports have emerged from Ivory Coast. Unsold cocoa stocks have accumulated, particularly in Ivory Coast, where warehouses are filling up with beans that remain unpurchased. This buildup of inventory has put additional pressure on the governments and regulatory bodies to find solutions to ensure farmers receive timely payments and to prevent further disruption in the cocoa supply chain.
In response to the crisis, Ivory Coast’s government recently initiated a program aimed at alleviating the financial strain on farmers by purchasing 100,000 tons of unsold main crop cocoa stocks. This intervention involves an investment of approximately half a billion dollars, demonstrating the government’s commitment to stabilizing the sector. Meanwhile, Ghana’s cocoa regulator took the step of reducing the fixed price paid to farmers by nearly one-third, lowering it to about $3,580 per ton. This decision followed estimates that Ghana had around 50,000 tons of unsold cocoa stock. Looking ahead, Ivory Coast plans to implement a similar price reduction starting March 1, hoping that a lower fixed price will encourage international traders to resume purchases. The government has also announced that it will reveal the new fixed price by the end of February, which is notably earlier than the usual schedule, signaling the urgency of the situation.
The dramatic fall in global cocoa prices can be attributed to several interconnected factors. After soaring to record highs earlier in 2024, cocoa prices have since collapsed, losing about three-quarters of their value. One major reason for this decline is a drop in demand from chocolate manufacturers, who have reacted to the previously high prices by shrinking chocolate bar sizes, incorporating more non-cocoa ingredients such as wafers and nuts, and substituting cocoa butter with alternative fats. At the same time, favorable weather conditions in key growing regions have produced larger and healthier cocoa crops, contributing to a global surplus estimated between 300,000 and 400,000 tons this season. Much of this excess supply is concentrated in Ivory Coast and Ghana, countries that lack the financial resources and infrastructure to store large quantities of unsold cocoa beans, unlike global traders and processors who have more capacity to manage inventory. It is also important to note that there is typically a lag of about a year between fluctuations in cocoa futures prices and their impact on retail chocolate products, meaning the effects of today’s price changes will be felt by consumers in the near future.
Cocoa plays a critical role in the economies of both Ivory Coast and Ghana. In Ivory Coast, the crop accounts for nearly 40% of the country’s export earnings, making it a cornerstone of the national economy. Ghana also relies heavily on cocoa, with the crop representing close to 15% of its export revenue. Beyond the macroeconomic implications, the cocoa sector supports the livelihoods of nearly two million farmers and their families across both countries, many of whom live below the poverty line and depend on timely payments to sustain their households. Ghana’s situation is further complicated by its ongoing economic challenges, including a deep financial crisis and the recent restructuring of approximately $30 billion in foreign debt. These difficulties have made it increasingly expensive and difficult for Ghana’s cocoa regulator to secure the necessary financing to purchase cocoa from farmers, adding another layer of complexity to the crisis.
As the cocoa sales crisis unfolds, the governments of Ivory Coast and Ghana are under immense pressure to stabilize the market, support farmers, and restore confidence among international buyers. The coming months will be crucial in determining whether the measures taken can successfully address the oversupply and pricing issues, or if further interventions will be required to safeguard the future of the cocoa industry in these two vital West African nations.
