Home Business & Economy Ghana’s 2014/15 cocoa production declines

Ghana’s 2014/15 cocoa production declines

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The drop in use of inputs reflects the difficulty farmers continue to have with raising financing
The drop in use of inputs reflects the difficulty farmers continue to have with raising financing
The drop in use of inputs reflects the difficulty farmers continue to have with raising financing

Ghana’s cocoa production is set to fall significantly in the 2014/15 (October- September) season, which could drive the world market into deficit after several years of surpluses, analysts say. Ghanaian bean purchases reached 541,000 tonnes by April 9, 22 percent down on the same period last season. This has led industry regulator Cocobod to revise its target for the main crop (October to June) to 720,000 tonnes, down from an initial 780,000 tonnes earlier in the season.

The sharp drop in output is believed to have been the result of an outbreak of black pod disease that swept the country, following heavy rainfall in the months leading up to the main crop. Losses were high as farmers did not have access to fungicides to treat cocoa trees, while fertiliser usage was low, with few farmers receiving sufficient quantities in time for the 2014/15 harvest. The drop in use of inputs reflects the difficulty farmers continue to have with raising financing, along with the winding down of Cocobod’s subsidised fertiliser scheme, which is being revamped under the World Bank-led 10-year sector strategy.

The smuggling of beans to Côte d’Ivoire may also have been a factor in the lower outturn, given that fixed farmgate prices in Côte d’Ivoire and Ghana –which were heavily in Ghana’s favour at the start of the season –have reached parity in US dollar terms. High consumer inflation is also eating into Ghanaian farmer incomes, increasing the incentive for smuggling beans to neighbouring countries. ‘The volume of smuggling should soon become apparent as Côted’Ivoire’s mid-crop in the east is expected to be poor, so any surge in arrivals will largely result from smuggled beans from Ghana,’ says an analyst at Ecobank.

The smuggling of beans to Côte d’Ivoire may also have been a factor in the lower outturn
The smuggling of beans to Côte d’Ivoire may also have been a factor in the lower outturn

‘Given the various constraints facing Ghana’s cocoa sector this season, we expect the main crop will struggle to reach Cocobod’s 720,000 tonne target. Moreover, with little provision of pesticides and fertilisers, the light crop is likely to underperform, and as a result we expect a total crop of 730,000-750,000 tonnes in 2014/15,’ the analyst added.

The disappointing outturn in Ghana has yet to have a serious impact on international cocoa prices, which have fallen by 13.5 percent since the start of the season, reflecting the strong main crop in Côte d’Ivoire, the mixed outlook for world demand and disappointing grinding data earlier in the year.

However, should demand recover over the coming months as West Africa’s cocoa season starts to tail off, the fall in Ghanaian production could drive up international prices in the lead-up to the new season in October.

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