Ghana raises cocoa farmgate price to GH₵49,600

In a move to support cocoa farmers and boost their incomes, the Ghanaian government has raised the cocoa farmgate price to GH₵49,600 per metric ton for the 2024/25 season. This increase comes as a second adjustment in farmgate prices, aiming to align with Côte d'Ivoire's pricing and enhance cross-border trade flows. The government's decision comes amidst financial stress within the sector, where farmers have faced challenges in securing finance for the current season. Tedd George, Chief Narrative Officer at Kleos Advisory, joined CNBC Africa to discuss the implications of this shift in pricing strategy on the international cocoa market and the West African region. George highlighted the complexities surrounding the pricing parity between Ghana and Côte d'Ivoire, emphasizing the potential impact on smuggling activities and market distortions. While a fixed price regime benefits farmers by ensuring steady income throughout the season, it also poses challenges, especially in less regulated markets like Cameroon. George stressed the importance of providing additional support to farmers beyond pricing, such as access to fertilizers, pesticides, disease control, and improved seed varieties to discourage cocoa smuggling and enhance sustainability. With global cocoa stockpiles hitting a 19-year low, the need for effective management of price volatility becomes critical for West African cocoa producers. George suggested leveraging dedicated warehouses and exchange-traded warehouse receipts to enable farmers and cooperatives to secure financing and manage stocks more efficiently. This approach aims to address the seasonal cash flow challenges faced by farmers and enhance market liquidity. Moving towards cocoa processing, George highlighted the necessity of profitable processing operations to drive value addition in the region. He underscored the importance of cost-effective energy solutions and infrastructure development to improve processing efficiency. Moreover, securing a consistent supply of cocoa beans is crucial for sustaining processing operations and competing in the global market. George suggested that initiatives like the Africa Cocoa Exchange Project could help processors access a reliable supply of beans and reduce dependency on fluctuating market conditions, ultimately enhancing processing capacity and competitiveness in the industry.