Ghanaian Cocoa at a Tipping Point: Insights from CHOCOA and Beyond
Markets Readiness Technical Assistance (MRTA) is one of Regeneration’s core facilities, supporting small and medium sized regenerative agribusinesses (otherwise known as “Restoration Champions” or “RCs”) to scale commercially and enhance land restoration. At CHOCOA, a week-long cocoa event in the Netherlands, MRTA explored opportunities for its Ghanaian agribusinesses within specialty and sustainable cocoa markets. What emerged was a stark reality: Ghanaian cocoa is at a crossroads.
From Reliable Ally to Uncertain Future
For decades, Ghana was seen as a dependable cocoa origin—often referred to as the "Switzerland of Africa" for its reliability, ease of doing business, and high-quality produce. Yet at CHOCOA, buyers echoed a growing sentiment that Ghana’s once-strong reputation is faltering. Many small and mid-sized players are shifting away from Ghana in their sourcing strategies, deterred by a range of escalating challenges within the value chain.
Production under Strain
Firstly, Ghana’s cocoa production has been declining at an alarming rate—over 5% annually—due to climate change, declining soil fertility, aging plantations, and the prevalence of swollen shoot disease, which now impacts 81% of key growing areas. Compounding these issues are West Africa's harsh Harmattan winds, further imperiling yields.
This crisis isn’t limited to Ghana. Neighbouring Côte d’Ivoire, which along with Ghana produces 60% of the world's cocoa, faces similar struggles. The result? A global cocoa supply shortage not seen in 40 years, with futures prices surging to around $10,000/MT since December. Certified cocoa stocks—critical reserves for processors—are at just 40% of what was available at the start of the 2023/24 season in the U.S. At CHOCOA, concerns were raised that without a swift recovery in Ghana's harvests, the world risks falling short of supply, and many smallholders risk losing their livelihoods.
Field workers from the Cocoa Health and Extension Division (CHED) identify cocoa trees affected by swollen shoot disease on a farm in the Osino community in the Eastern Region, Ghana, February 27, 2024. REUTERS/Francis Kokoroko/File Photo Purchase Licensing Rights
Regulatory Roadblocks
Amid the ongoing supply crisis, Ghana’s regulatory environment has put further strain on its cocoa agribusinesses. COCOBOD, the government body overseeing cocoa pricing and production, has withdrawn essential loan facilities previously used by agribusinesses to purchase raw materials. This policy shift has placed the financial responsibility for pre-financing directly onto traders.
However, most traders are hesitant to bear this risk, as it involves paying for cocoa beans months before their arrival at warehouses. Hedging can help manage risks, but it's tricky. For small traders, it’s risky because they might not have enough money to cover unexpected costs. For big traders, it’s challenging because they have to pay a lot upfront, which can be hard to manage. Additionally, lenders are not inclined to provide and/or increase loans due to ongoing volatility.
This lack of accessible financing has left many agribusinesses unable to procure cocoa from smallholder farmers, with loan requirements having tripled amid soaring cocoa prices. This financial strain has had significant consequences, including illegal smuggling, side-selling by farmers, and a reduction in farmer incomes. Ultimately, agribusinesses are struggling to maintain day-to-day operations, let alone invest in the critical advancements needed to recover Ghana’s supply.
Structural Inequities
While sustainability and fair wages have become major focal points within the global cocoa industry, Ghana still faces profound structural issues. West African farmers are trapped in a system where only a small fraction of cocoa’s value remains within producer countries—often less than 5-10%. Farmers in Ghana generally earn just $3,210/MT, roughly 30% of international market prices. This stark disparity limits their ability to achieve a living income and incentivise sustainable farming practices.
In contrast, countries with freer cocoa markets, such as those in South American origins, offer more favourable conditions for farmers, allowing farmers to sell their cocoa beans directly to buyers at competitive prices. This flexibility can lead to higher incomes, as farmers can take advantage of market fluctuations and negotiate better deals. These markets typically have fewer government-imposed restrictions or price controls. At CHOCOA, some buyers suggested shifting to sourcing from these origins to create more benefits for smallholder farmers.
Elizabeth Osei Agyei is a cocoa farmer in Asamankese in Ghana and a member of the cooperative Kuapa Kokoo. Together with her husband she has 3.5 hectares of land to cultivate cocoa (Photo: copyright INKOTA)
Leveraging Large Traders to Keep Ghana’s Supply Flowing
Considering systemic value chain challenges, MRTA is finding that mostly large traders such as Ofi, ECOM, Barry Callebaut, and Cargill, are continuing to source significantly from Ghana. These players are better equipped to navigate the complexities of Ghana's cocoa sector due to their local presence, familiarity with COCOBOD’s operations, and ability to provide pre-financing where required. Their established processing units and partnerships within the country ultimately position them better to absorb higher risks and maintain continuity in the supply chain.
As the 2024/25 season nears its conclusion, MRTA is prioritising opportunistic trade deals by engaging large-scale buyers from its network, developed through impactful programmes like P4F and Rebuild. It is also proactively working to secure trade deals ahead of the 2025/26 season, providing its portfolio of agribusinesses with confidence, stability, and assurance for the future, as well as insights into the working capital needs of agribusinesses, enabling informed and early investor engagement.
Purpose-Driven Partnerships: Unlocking Ghana’s Premium Cocoa Potential
Buyers that are purpose driven are also crucial players in Ghana's cocoa value chain. While often smaller and less equipped than large traders to operate in high-risk regions, they understand the vital role that cocoa plays in sustaining thousands of farmer livelihoods in Ghana. Their commitment goes beyond profit, acknowledging that a collapse in the value chain could lead to lost livelihoods, economic decline, and environmentally destructive practices like mining and deforestation.
Motivated to protect the sector, many of these buyers—often focused on sustainable and specialty cocoa—are starting to see diversification into Ghana as increasingly essential. Growing global demand for sustainable and specialty cocoa means that buyers must broaden their supply bases and mitigate risks tied to poor harvests elsewhere.
As highlighted at CHOCOA, South American suppliers remain a preferred choice for premium cocoa due to their unique flavours and well-understood quality. However, Ghanaian suppliers have an opportunity to reshape perceptions. By emphasising their sustainable and specialty offerings, tied with their larger volumes, they can capture rising demand and incentivise buyers to navigate the challenges of Ghana’s value chain.
MRTA is helping its portfolio of cocoa agribusinesses to foster purpose-driven partnerships by conducting comprehensive market research and strategic buyer segmentation to identify partners whose mission closely align with their values. By involving other stakeholders like investors, MRTA also de-risks partnerships, enabling buyers to scale operations in Ghana.
The Path Forward
The challenges facing Ghanaian cocoa are difficult, significantly deterring many buyers and investors. To ensure a sustainable future for Ghana’s cocoa sector, the following actions are critical:
Prioritising restoration and climate adaptation: Suppliers, with support from key partners, must focus on improving crop yields and enhancing the quality of supply, addressing the impacts of climate change, declining soil fertility, and aging plantations.
Facilitating affordable capital: Investors must increase access to affordable financing for agribusinesses, enabling them to purchase sustainable cocoa and incentivise smallholders to farm sustainably and sell through aggregators, who possess greater bargaining power to negotiate higher premiums.
Driving buyer commitment: Buyers must engage in solving value-chain challenges and actively work to de-risk investments in Ghanaian cocoa, ensuring stability and resilience in the sector.
Strengthening technical assistance: Programmes such as MRTA are instrumental in helping agribusinesses to be “market ready”. Whether that is connecting them to mission-aligned buyers, supporting them in raising investment, or providing technical advisory support to scale their restorative business models.
The situation is critical: without action, Ghana may lose its position as a key player in the global cocoa market, threatening the livelihoods of countless smallholder farmers and depriving the world of its second-largest cocoa supplier—a loss that would not only disrupt cocoa prices and global supply chains, but also drive further unsustainable land use and deforestation.