The Chief Executive Officer of the Ghana Cocoa Board (COCOBOD), Joseph Boahen Aidoo, has expressed concerns over the alarming rate of cocoa smuggling, which is significantly affecting Ghana’s cocoa production.
Speaking to Journalists, Mr. Aidoo revealed that cocoa smuggling has escalated, with an estimated 100,000 to 120,000 megatons of cocoa being smuggled out of Ghana in the past two years.
According to Mr. Aidoo, the issue has been exacerbated by shifts in the international cocoa trading system.
"The global trading system is currently inverted, with spot prices becoming more favorable than futures," he explained. This shift, he said, has created new challenges for cocoa-producing countries like Ghana.
Mr. Aidoo provided insight into the recent trends in the global cocoa market.
"Before the price spike, around April 2023, the price of cocoa at the terminal markets hovered around $2,000 to $2,200 per ton. However, from April last year, prices began to soar, surpassing $3,000. By February this year, cocoa prices had reached over $12,000 per ton."
He further explained that despite this surge in prices, Ghana was unable to sell its cocoa at the higher spot prices due to its commitment to the futures market.
"Ghana has long been involved in the futures market, where buyers prefer to purchase cocoa for future use rather than immediate consumption. Buyers tend to opt for futures contracts because storing cocoa in Europe, with its high warehouse and insurance costs, is less economical than keeping the commodity in Ghana," Mr. Aidoo noted.
The COCOBOD CEO emphasized that for both buyers and sellers, futures trading was the preferred option until March 2023, when the spot prices became more lucrative.
"Before the spike in prices, futures contracts were more advantageous, and many buyers had locked in their purchases at $2,200 per ton. But in early 2023, adverse weather conditions, including El Niño and the highest recorded temperatures in history, disrupted global cocoa production."
Aidoo explained that El Niño, a tropical air mass from the Pacific Ocean, brought excessive rainfall to West Africa, affecting cocoa crops.
"Cocoa does not thrive in overly wet conditions, as too much rain prevents nutrients from reaching the plants. This led to the loss of many cocoa flowers, which caused panic in the market," he added.
As buyers scrambled to secure limited cocoa supplies, spot prices skyrocketed. "By September last year, spot prices had exceeded $6,000 per ton," Aidoo said.
The COCOBOD CEO concluded by highlighting the urgency of addressing cocoa smuggling and stabilizing Ghana's cocoa production to ensure the nation remains a leading cocoa exporter in the face of global market volatility.
Story by: Joshua Kwabena Smith
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