Economist Explains Cocoa Price Drop, Urges Local Processing To Boost Revenue

Mr. Addae Asante, economist and lecturer at Kumasi Technical University (KsTU), says the recent drop in global cocoa prices from $12,000 per tonne to below $4,000 per tonne reflects reduced demand and changing production practices by chocolate manufacturers.

Speaking with Opemsuo Radio’s Kofi Boakye on
Nkwantannanso, he explained that manufacturers, faced with higher costs at the peak price, now use less cocoa and substitute it with other ingredients such as shea butter in chocolate production.

“Those who buy the cocoa, where the price reached $12,000, realized their cost of production went up, so they decided they won’t use only cocoa for the chocolate. They use more shea butter and add a little cocoa with additives,” Mr. Asante said.

He also clarified that the Ghanaian government currently pays cocoa farmers 90% of the world market price, which translates to about 2,587 cedis per bag, compared with 2,887 cedis in the global market.

He noted that cocoa farmers’ earnings depend on global prices and exchange rates.

“If the world price goes up and exchange rate goes up, we increase the price for cocoa farmers. Also, if world price goes down and exchange rate goes down, the price of cocoa will reduce,” he added.

Mr. Asante emphasized the need for Ghana to process more cocoa locally to add value, prevent spoilage, and generate higher revenue for the country.

“We have to put things in place as promised. When we buy the cocoa, we will process it here in Ghana and add value so we can sell at a higher price and generate revenue for the country,” he said.

He compared the cocoa pricing adjustments to the deregulation of fuel prices during former President Kufuor’s administration, highlighting the importance of flexible pricing in response to global market changes.