Export Reliance Leaves Ghana’s Cocoa Industry Vulnerable to Global Market Trends – Economist
By: Solomon Nartey Tetteh
Financial Economist, Lord Mensah, has attributed recent developments in Ghana’s cocoa pricing to shifting global commodity market dynamics and uncertainties within the futures market.
Speaking on Business Breakfast on Zed 101.9FM, Prof. Mensah explained that the global cocoa market operates within a complex framework influenced by climate change, supply disruptions, and the performance of futures trading.
“You see, the commodity market has its own dynamics, and the futures dictate these days. The futures market is not as vibrant as it is supposed to be because of climate change issues and related factors. Clearly, you cannot easily determine a future price,” he said.
According to him, this uncertainty in the global futures market has contributed significantly to the volatility currently being witnessed in cocoa prices worldwide.
Prof. Mensah noted that Ghana’s heavy reliance on exports makes the country vulnerable to global price movements. Although Ghana is one of the world’s leading cocoa producers, domestic consumption remains relatively low.
“The tonnage that we produce, we don’t consume more than 20 percent of what our farmers bring out. Obviously, we rely on the international market. So if the global price goes up, it has to trickle down to our market,” he stated.
He further pointed out that historically, Ghana did not operate with a clearly defined formula or index that directly linked global market prices to local producer prices.
“In the past, we never had a formula or an index that determines the local market price. It is more like the cocoa board sits down, looks at all the inputs that go into operations, and then deducts those costs from the freight-on-board price,” he explained.
His comments come in the wake of recent reductions in farm-gate prices, which have left many cocoa farmers in shock. With cocoa remaining a critical foreign exchange earner for Ghana, fluctuations in the global commodity market are expected to continue shaping local pricing decisions and farmer incomes in the months ahead.
