Ghana has experienced significant losses in its cocoa sector during the 2023/24 season, with over a third of its total production lost to smuggling. This crisis has emerged as a result of low domestic cocoa prices and delayed payments to farmers, which have led many to seek better returns by selling to increasingly well-organized smuggling networks operating across the region.
The global cocoa market has been strained by poor harvests in both Ghana and Côte d’Ivoire, the two largest cocoa producers in the world. This has resulted in a four-year global supply deficit, causing cocoa and chocolate prices to rise. Despite these increases, Ghanaian farmers are facing a domestic market where prices have not kept pace with international rates. Countries like Côte d’Ivoire and Togo offer more attractive prices, driven by the stability of the CFA franc and fewer market regulations, making them more appealing to Ghanaian farmers struggling with local market conditions.
As of June 2024, Ghana had produced 429,323 metric tonnes of cocoa since the season began in September, significantly below expectations. This figure represents less than 55% of the average production at the same point in previous years, signaling that the country is on course for its largest cocoa production decline in more than 20 years. The cocoa marketing board, tasked with overseeing the sector, has expressed deep concern over these losses.
According to officials, smuggling of cocoa has surged dramatically, with losses more than tripling compared to previous seasons. A senior official from the board estimates that around 160,000 tonnes of cocoa were lost to smuggling in 2023/24. The country’s anti-smuggling task force has ramped up its efforts, intercepting roughly 250 tonnes of cocoa destined for illegal trade, a sharp increase from the 17 tonnes seized in the 2022/23 season.
Smuggling operations have become highly organized, using innovative methods to transport cocoa across borders. Cocoa has been found concealed in trucks disguised as carrying quarry chippings, hidden in drums marked as palm oil, and even smuggled using fuel tankers with intact seals. Traffickers have been moving significant quantities of cocoa to neighboring countries like Togo, Burkina Faso, and Mali, where the promise of higher prices makes illegal trade an attractive option for cash-strapped farmers.
The roots of this crisis can be traced back to 2022, when Ghana was hit by a severe economic and currency crisis. During this period, cocoa farmers began to feel the financial strain, with payment delays exacerbating their difficulties. The cocoa marketing board’s failure to make timely payments for cocoa deliveries, due to complications with the syndicated loan system used to finance purchases, has further fueled the smuggling problem. Farmers, unable to receive fair and timely compensation, have turned to traffickers offering better deals.
Despite these challenges, Ghana is taking steps to address the issue. The country opened its 2024/25 cocoa season earlier than usual in a bid to stabilize the market. A new funding model has been introduced to ensure smoother financial operations, and the farmgate price for cocoa has been raised by 45% to provide more competitive compensation to farmers. These efforts are aimed at curbing the appeal of smuggling by improving domestic conditions for cocoa sales.
However, some farmers remain cautious about the long-term impact of these changes. While the price hike is a positive step, there are concerns that a weakening currency could erode the gains from the increase, making the situation more challenging. Furthermore, while the early season launch and new funding model offer hope, the effectiveness of these measures in combating smuggling and revitalizing the cocoa sector remains to be seen.
Officials from the cocoa marketing board are determined to tackle the smuggling crisis head-on, with plans to deploy the military to assist in intercepting traffickers. However, it is clear that addressing the underlying economic and market challenges, particularly payment delays and price stability, will be critical to restoring confidence in the sector and curbing the smuggling that has caused such significant losses.