26.2 C
Accra

Cocoa Processing Industry in Crisis: Shutdowns and Job Losses Loom

The global shortage of cocoa beans, including in Ghana, the world's second-largest producer, is the main cause of this crisis. Ghana's cocoa production has sharply declined from just over one million metric tonnes in the 2020/2021 season to between 492,000 and 580,000 tonnes in the 2023/2024 season.

Ghana’s cocoa processing industry is in turmoil as numerous companies suspend operations due to a critical shortage of cocoa beans and powder. Those able to secure supplies face exorbitant prices for limited quantities. This disruption has led to temporary layoffs, forcing workers to stay home until cocoa becomes available, with the high cost of restarting machinery further straining the companies financially.

According to The Accra Times sources, companies like Chocomac have shut down and sent some workers home. Another major brand, Niche, operates only during the day to supply its confectionery factory, while Cargill, an international free zone cocoa processing company, has shut down four times and anticipates another shutdown in three months.

Barry Callebaut is the only company seemingly operating normally, due to its practice of purchasing cocoa beans a year in advance and its large warehouses. However, it is likely to face challenges in the coming year. Some popular chocolate brands and cocoa products have vanished from store shelves as producers halt their plants due to the shortage.

- Advertisement -

Price hikes of cocoa beans and products

Join our WhatsApp Channel for more news

This shortage has led to a significant spike in the prices of chocolate and other cocoa products. The Accra Times reported on May 28 that Ghana’s popular Kingsbite chocolate now sells for GH¢32 for 100g and GH¢18 for 50g, up from GH¢15 and GH¢8-10, respectively, four months ago, marking an increase of about 100%. Wholesale markets are similarly affected, with Joyful Cakes, a renowned cake maker, reporting on social media that the price of chocolate they previously bought for GH¢1,800 rose to GH¢2,470 in April and has now reached GH¢4,270. The company expressed frustration over the steep price hike, calling it “insane.”


Read Also

- Advertisement -

The global shortage of cocoa beans, including in Ghana, the world’s second-largest producer, is the main cause of this crisis. Ghana’s cocoa production has sharply declined from just over one million metric tonnes in the 2020/2021 season to between 492,000 and 580,000 tonnes in the 2023/2024 season. Consequently, earnings from cocoa and cocoa products fell by 49% to US$599.3 million in the first four months of this year compared to the same period last year, despite a nearly 200% increase in global cocoa prices from $4,235.60 to between $10,116.9 and $12,261 per tonne in April 2024. This highlights the severity of the production decline.

Efforts to source cocoa beans from neighbouring countries have been hampered by strict importation rules, such as the requirement to transport beans by sea rather than by road, which would be cheaper and faster. Industry stakeholders warn that without immediate government intervention, thousands of jobs could be lost within a few months.

Reasons for production decline

Several factors are contributing to the reduced cocoa harvest in Ghana. Critics argue that the government has neglected the cocoa sector, failing to maintain the high production levels of previous years. The 2023/2024 crop season is expected to be the lowest since 2004.

Climate change has exacerbated the situation, with unpredictable rainfall patterns and rising temperatures leading to droughts that parch trees and excessive rain that fosters fungal diseases like Swollen Shoot. This virus spreads rapidly through plantations, killing cocoa trees and significantly reducing yields.

Smuggling and illegal mining are also major issues. A statement from the Ghana Cocoa Board on January 12, 2024, highlighted the “unbridled and unmitigated” smuggling of cocoa to neighbouring Côte d’Ivoire and Togo and the rampant threat of illegal small-scale mining (Galamsey). These activities have devastated Ghana’s cocoa landscape and severely reduced revenue from the cocoa trade. Farmers are lured by hefty sums to sell their land to illegal miners, while others abandon their farms due to the dangers posed by mining activities.

High input costs, particularly for fertilizers that were once provided to farmers for free, are another contributing factor to the decline in production. Without access to affordable inputs, farmers struggle to maintain their cocoa farms, further exacerbating the industry’s challenges.

While you're here, we just want to remind you of our commitment to telling the stories that matter the most.Our commitment is to our readers first before anything else.

Our Picks

THE LATEST

INSIDE POLITICS

Get the Stories Right in Your Inbox

OUR PARTNERS

Allafrica.com

MORE NEWS FOR YOU