Poor Harvests in Ghana and Ivory Coast Drive Up Cocoa Prices Amid Smuggling Surge

Date:

HOHOE DISTRICT, Ghana, July 9 (Reuters) – Low prices and payment delays are forcing Ghana’s cocoa farmers to sell to increasingly sophisticated smuggling rings, diverting production from border areas and raising concerns over the next season’s output, growers and officials told Reuters.

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Without resolving the financial issues and closing the gap between Ghana’s official price and what traffickers pay, the situation could worsen for the world’s second-largest cocoa producer.

“From January to date, we have not been able to grade any cocoa,” said Frank Amoah-Frimpong, a top official at the state-owned marketing board Cocobod for the eastern Volta and Oti border regions. “It’s pathetic. It’s sad.”

Global cocoa prices have surged this year due to poor weather, disease, and illegal mining, which have devastated harvests in Ghana and Ivory Coast, the world’s top producer. Despite this, Ghana’s government-fixed price for farmers has not reflected the increase, giving an edge to smugglers operating out of neighboring Togo, according to farmers and officials from Cocobod and security forces.

Cocobod sells its crop forward and sets the farmer price based on the average sale price. Since global prices were lower when this season’s cocoa was sold, increasing the price paid to farmers now would mean accepting a loss on the crop.

The farmer price was hiked by nearly 60% in April to discourage trafficking, but local buyers say they cannot compete with smugglers who pay more than double the official price without concern for bean quality. Cocobod officials stated that none of the cocoa produced in the Volta and Oti regions since January has been purchased by official licensed buyers—all of it has been trafficked.

A licensed buyer in eastern Ghana, who requested anonymity due to fear of reprisals, reported that smuggling has increased over the past three seasons. From 28,000 bags of cocoa purchased in the 2020/21 season, the buyer has sourced just 870 so far this season.

“We have money. If someone tells us today that they have 1,000 bags, I will get money to pay on delivery,” the buyer said. “But the farmers are selling to those who buy and send to Togo, because their price is higher.”

Other licensed buying companies across the Volta and Oti regions have struggled due to a lack of financing from Cocobod, leading many to close down.

Organized Cartels
Joshua Dogboe, a farmer from eastern Ghana’s Likpe area, said he is still owed money for cocoa delivered to state-owned buyer PBC last season, just weeks before it closed its local office.

“I have expenses to take care of and when the smugglers come with money to buy, I will sell quickly,” he told Reuters.

Cocobod reported losing around 150,000 tons of cocoa production last season to smuggling and illegal gold mining. While officials and police declined to estimate current season losses, they noted that smuggling rings have become bolder and more sophisticated. These rings, in some cases financed and operated by foreign nationals from Lebanon, China, France, and Russia based in Togo, have become increasingly organized.

Abu Seidu, head of Cocobod’s Cocoa Health and Extension Division in the Volta and Oti regions, described how the smuggling operations have evolved. “Farmers used to carry bags of cocoa across the mountainous border on motorbikes,” he said. “Now you see a tipper truck loaded with cocoa and stone chippings on top as disguise. If you catch a truck with 800, 500, or 200 bags, it tells you that someone is now aggregating the cocoa. It’s now an organized cartel.”

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