Ghana Reduces Cocoa Farmgate Price by 28% as Government Absorbs $150 Million in COCOBOD Losses

The Government of Ghana has announced a 28% reduction in the cocoa farmgate price, marking the first such decrease since 2020. This decision comes in response to a significant decline in global cocoa prices and the accumulation of outstanding payment arrears to farmers. To mitigate the impact of this shift and address liquidity challenges within the Ghana Cocoa Board (COCOBOD), the Cabinet has directed the immediate purchase of cocoa beans and the urgent settlement of debts owed to farmers to restore confidence in the sector.

Under the new directive, the government has committed to absorbing approximately $150 million (roughly GHS 1.6 billion) in losses expected by COCOBOD. This fiscal intervention specifically covers 50,000 metric tonnes of cocoa beans that were already supplied at the previous, higher rate of over $5,200 per tonne. Deputy Finance Minister Thomas Ampem Nyarko confirmed that despite the new lower farmgate rate, farmers who have already supplied beans will be paid at the previously agreed-upon price, representing a substantial state commitment to maintaining stability within the agricultural sector.

Finance Minister Cassiel Ato Forson has further reassured stakeholders that these measures are part of a broader suite of ongoing reforms aimed at safeguarding farmers' interests and ensuring the long-term sustainability of the cocoa industry. During government briefings, officials emphasized that the administration is tackling structural challenges through revised producer prices, improved financing models, and a renewed focus on local value addition and enhanced processing. These initiatives are designed to improve returns for rural cocoa farmers, who remain a cornerstone of Ghana’s export earnings and rural livelihoods.

While the specific funding sources for these payments have raised questions given COCOBOD’s current liquidity constraints, the government’s decision to absorb massive losses reflects the strategic priority placed on the cocoa value chain. As Ghana navigates volatile global market conditions, the focus remains on balancing fiscal responsibility with the necessity of protecting the economic backbone of the country. The success of these reforms will depend on the government's ability to implement structural changes that shield farmers from future global price shocks while maintaining the industry's competitiveness.