Ghanaian cocoa farmers, facing economic hardships exacerbated by the devaluation of the cedi, are increasingly resorting to smuggling their produce across borders to countries like Ivory Coast to secure better prices. Isaac Antwi, a cocoa farmer from Suhum in Ghana’s Eastern Region, highlighted the necessity of smuggling due to the declining value of the cedi, which undermines profitability within Ghana itself.
Antwi explained, “With the cedi losing value every day, selling in Ghana just doesn’t cut it. The prices are better across the border, and the stronger currency means I can feed my family and pay off my debts.”
Ghana, one of the world’s top cocoa producers, is grappling with economic challenges despite recent efforts to stabilize its economy. The country secured a $3 billion credit from the International Monetary Fund (IMF) and restructured its debt to mitigate a severe economic crisis. However, the depreciation of the cedi by over 20 percent against the dollar this year has severely impacted the cocoa industry’s profitability.
The production costs for cocoa farmers have risen significantly due to expensive fertilizers and other essential farming materials. Moreover, poor road networks have inflated transportation costs, further squeezing margins for cocoa growers across the country.
In an effort to stabilize the sector amidst global cocoa price fluctuations, Ghanaian cocoa farmers are obligated to sell their produce to the state-run Ghana Cocoa Board (COCOBOD), which fixes prices to shield farmers from market volatility. Despite a recent increase in the cocoa price paid to farmers by the government, rising costs and the allure of higher prices in neighboring countries like Ivory Coast and Togo have driven many farmers to resort to smuggling.
Serwaa Adjei, another cocoa farmer from Suhum, emphasized the challenges faced by smallholder farmers, stating, “If the government increased the cocoa price to match our neighbors, the smuggling would stop. We need to survive.”
Dennis Nyameke, a veteran cocoa farmer from Ghana’s Western Region, elaborated on the economic incentives behind smuggling, saying, “A bag of cocoa sells for at least $137 in Ghana, but when we smuggle it to Ivory Coast, we can get close to $152. With four children to care for, I can’t afford to ignore that difference.”
Fiifi Boafo, head of public affairs at COCOBOD, acknowledged the detrimental effects of smuggling, illegal mining activities, and adverse weather conditions on cocoa production. He highlighted the government’s efforts to support cocoa farmers through increased payments and initiatives to combat illegal mining, which disrupts farming operations and pollutes essential water sources.
Despite these efforts, Obed Owusu-Addai from EcoCare Ghana emphasized the need for comprehensive reforms, urging the government to stabilize the cedi, provide subsidies to farmers, and enhance infrastructure. He stressed that sustainable agricultural policies are crucial not only for improving farmers’ livelihoods but also for ensuring the long-term viability of Ghana’s cocoa industry.
The cocoa sector in Ghana has also been grappling with challenges such as the Cocoa Swollen Shoot Virus Disease, which has led to significant declines in production and revenue. Approximately 500,000 hectares of cocoa farms have been affected, resulting in substantial losses for Ghana’s economy.
The repercussions extend beyond Ghana, affecting global cocoa markets as well. Industry experts estimate that over 100,000 tonnes of cocoa beans have been smuggled into Ivory Coast from Ghana since last year alone. This illicit trade, coupled with other challenges, has contributed to a $500 million drop in cocoa revenue in the first quarter of 2024, as reported by the Bank of Ghana.
Looking ahead, COCOBOD projects that Ghana’s cocoa production will reach 800,000 tonnes by the end of the year, signaling potential recovery from recent losses. With over a million people dependent on the cocoa industry for their livelihoods in Ghana, the sector’s stability remains a critical priority for the country’s economic prosperity.
“We’re very optimistic,” concluded Boafo, reflecting on efforts to rejuvenate Ghana’s cocoa sector amidst ongoing challenges and global market dynamics.
Be First to Comment