Illegal mining, climate issues, diseases, and smuggling caused cocoa export revenue to drop by over $500 million in early 2024, as Ghana’s production continues to fall. The Bank of Ghana’s May 2024 data shows this decline, with cocoa export revenue falling from over $1 billion last year to about $496 million this year, the lowest in nearly nine years. Meanwhile, the cedi has lost over 20% of its value against the dollar since the start of the year.
The currency of the second-largest cocoa producer in the world “depreciated 0.2% to 14.9335 per dollar by the close of trading in Accra [yesterday], the lowest level since at least 1994 when Bloomberg began compiling the data,” according to a Bloomberg article.
The article also stated that the cedi is currently “the fourth-worst performer among roughly 150 currencies tracked by Bloomberg worldwide, after the Egyptian Pound, Nigerian Naira, and the Lebanese Pound” due to its fast fall against the US dollar.
Decline in Cocoa market
Ghana’s cocoa harvest in the 2023/24 season has negatively impacted the country’s external payments position, with a trade surplus falling by over half in the first two months. This has posed a risk to the cedi’s exchange strength, which has lost over 20% against the US dollar.
The Bank of Ghana reported a 54% narrowing of the trade surplus to $392.8 million for January-February 2024, and revenue from cocoa exports fell significantly. Ghana’s cocoa harvest is expected to be between 650,000 and 700,000 tons, but factors such as adverse weather, disease, fertilizer shortages, and illegal mining activities could lead to yields falling below 500,000 tons. Rising cases of bean smuggling to neighboring countries could also affect Ghana’s ability to obtain bean assurances to attract bigger loans from the cocoa syndication program.
The Ghana Cocoa Board (COCOBOD) is aware of the reduction in its share of global cocoa production due to smuggling, and the upcoming crop season presents challenges for Ghana. To secure its next cocoa syndicated loan, Ghana needs to prove to investors that it can produce more beans in the next season.
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