Cocoa beans shortage impacts Ghana’s deliveries

Ghana, a key player in the global cocoa market, is facing a severe shortage of cocoa beans that may impact its deliveries for the upcoming season. The country is reportedly rolling over 350,000 tons of cocoa deliveries to the next season due to the shortage, which has left its cocoa sector in a difficult situation. Ted George, Chief Narrative Officer at Kleos Advisory, shed light on the challenges faced by Ghana in a recent interview on CNBC Africa. According to George, the current situation in the cocoa industry can be described as a "perfect storm" of financial and climate factors. This season marks the third consecutive year of significantly reduced cocoa crops in Ghana, with production estimated to be around 670,000 tons. The country's forward sales have also been affected, with only 100,000 tons of beans sold and the remaining 350,000 tons rolled over to the next season at prices significantly lower than the current market value. The impact of the shortage is compounded by external factors such as climate change and El Niño, which have disrupted weather patterns and further constrained Ghana's cocoa production. The looming prospect of farmers not receiving higher prices for their crops raises concerns about the industry's future, with potential implications for smuggling and shifts in agricultural practices. In light of the global cocoa production forecast of 4.45 million tons, a 10.9% decrease from the previous season, cocoa processors and chocolate firms are expected to tap into their cocoa stocks to meet demand. While there are sufficient stocks to sustain production for several years, the reliance on older stocks poses challenges for industry players. The surge in cocoa prices has brought about market dislocations, prompting analysts to question the long-established mechanisms of cocoa trade. The volatility in prices and production forecasts suggest a future of uncertainty for the industry, with potential for price hikes and continued market instability. With Ghana and Cote d'Ivoire jointly producing 60% of the world's cocoa, the supply shortage in these countries presents an opportunity for other African producers to capitalize on the gap in the market. Countries like Nigeria, Cameroon, and smaller producers in Africa are already seeing increased demand and higher prices for their cocoa, signaling a potential shift in production dynamics within the continent. Looking ahead, the cocoa industry faces a period of transition marked by challenges and opportunities for both established and emerging cocoa-producing nations. As stakeholders navigate the complexities of supply chain disruptions and market fluctuations, the future of cocoa trade remains uncertain yet ripe with potential for growth and innovation.