Current State of Cocoa Production in Ghana

Ghana is the world’s second largest cocoa producer, the country has a strong position on the world market for standard cocoa with a market share of an estimated 20%.

During the 2015/2016 harvesting season the country produced approximately 800,000 metric tonnes of cocoa, which was 20% of the total world harvest. Until a couple of years ago, cocoa generated around a third of Ghana’s export earnings. This share decreased due to the start of oil production. In 2014, cocoa was the third largest export product with a share of 20% (US$ 2.6 billion) in total exports (US$ 13.2 billion).

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The marketing year for cocoa begins in October, when harvest of the “main crop” begins, followed by the harvest of a smaller “light crop” in July. Light-crop beans are smaller than the main-crop variety, but are identical in quality and grown on the same trees. The main crop accounts for 90% of total annual cocoa bean production in Ghana, and the light crop accounts for the remaining 10%.

ICCO projects that total output for Ghana is anticipated to reach around 850,000 tonnes in 2016/2017. Declared purchases as at 23 February, 2017 were reported at 657,000 tonnes; this compares against 661,000 tonnes recorded for the same period of the previous season (down by 0.5%). However, the ICCO noted that, favourable weather conditions were expected to benefit the coming mid-crop.

Cumulative cocoa bean purchases by the Ghana Cocoa Board in the 2015/2016 season reached 778,000 tonnes, representing an increase of around 38,000 tonnes compared to the previous season. Although production fell short of the Government’s estimated target, it exceeded the low level of the previous season.

For the 2016/2017 season, the Government announced an increase of the guaranteed price paid to cocoa farmers to GH¢7,600 per tonne (US$1,914 - based on the exchange rate at the start of the season). As at 22nd October, 2016, cocoa purchases in Ghana, as reported by news agencies, reached approximately 200,000 tonnes.

The total export earnings from cocoa has been increasing since the mid-2000s. Apart from a dip between 2006 and 2007, there has been steady increase from 2007 consistently up to 2010 when Ghana earned approximately US$ 2.285 billion from total cocoa exports, which contributed 28.9% of the country’s total foreign exchange earnings. It had also been the stated policy goal of Ghana to achieving total cocoa production of 1 million tonnes, and in 2011, Ghana was said to have achieved that target.

Cocoa beans shipped to overseas destinations during 2013/2014 crop year totaled 721,222 tonnes. The FOB value of the beans shipped amounted to GHC 4,498,546,215 (US$ 1,405,795,692). Currently, Ghana exports its cocoa mainly to Western Europe which accounts for about 67.6%. The main importing countries are The Netherlands (33.8%), U.K. (12.1%), Belgium (8.9%) and Germany (3.6%). Outside of Europe, Ghana exports to Japan (7.2%) and U.S. (3.3%).

Cocoa production in Ghana was and is a major contributor to the tax income of the government. There are approximately 800,000 cocoa farmers in Ghana. Cocoa is grown on an estimated 1.9 million hectares. The cocoa industry employs about 60% of the total labor force of the agriculture sector, most cocoa farmers are smallholders who harvest cocoa on 2 to 3 hectares with a yield of on average 400 kg/ha. Including families of farmers, employees of trading companies and input services, the cocoa sector provides income for more than 1 million Ghanaians.

The cocoa sector is one of Ghana’s economic backbones. Ghana is not only the second largest producer of cocoa in the world, but it produces the world’s highest quality cocoa. The cash crop accounts for about 9% of Ghana’s GDP and makes up about one-third of the country’s export revenues, totaling over US$ 1.5 billion.

Additionally, cocoa is an important tool to guarantee the liquidity of the Ghanaian government. The government issues every year a bond which is secured by the predicted income from selling the cocoa of the next harvest. Potential investors know that due to the forward cocoa selling system the bond is a low risk investment. The Ghanaian government pays for the bond at much lower interest rates than it would have to pay for a bank loan.