KEY POINTS
- Climate change disrupts cocoa farming cycles, leading to lower yields and increased financial strain.
- Rising global cocoa prices are not translating to higher incomes for many local farmers.
- Cross-border smuggling due to price disparities threatens the economic stability of the cocoa sector.
Ghana and Ivory Coast, which produce about 65 percent of the world’s cocoa, are having increasing trouble maintaining their cocoa industries.
In addition to local farmers, the global chocolate business is also experiencing repercussions from the confluence of climate change, unstable economies, and cross-border smuggling.
Concerns about sustainable production have increased as a result of these problems, which have driven cocoa prices to previously unheard-of levels.
Climate change and crop production loss
A serious challenge to West African cocoa production is climate change. Climate events like El Niño have increased the frequency of conditions like drought, extreme heat, and erratic rainfall patterns. El Niño may get worse over the coming months, according to experts, which might be dangerous for crops that depend on stable weather.
Yield losses have occurred repeatedly in Ghana and Ivory Coast; in recent years, Ghana’s production has fallen below 55 percent of average outputs. In addition to having an effect on regional economy, this cut raises prices by creating a supply shortage in international cocoa markets.
Some experts advise moving cocoa production to higher, cooler places in order to overcome these difficulties. However, this adjustment requires significant investment and land access, which may not be feasible for many small farmers who already face economic constraints.
A lack of funding for adaptation further limits the ability of farmers to implement sustainable practices, posing long-term risks to both livelihoods and the cocoa industry as a whole​
Economic instability and rising production costs
While higher global cocoa prices provide opportunities for increased revenue, many farmers in Ivory Coast and Ghana see little of these benefits. Input costs for fertilizers and other resources have surged due to inflation, further burdening farmers who often live below the poverty line.
Though the Côte d’Ivoire-Ghana Cocoa Initiative introduced the Living Income Differential (LID), adding $400 per metric ton to cocoa prices, the LID’s benefits have been inconsistent across regions​.
Critics argue that additional support measures are needed to address rising costs and support farmers in adopting climate-resilient farming practices.
Meanwhile, price volatility in global markets impacts local economies by creating uncertainty about future income for farmers. Cocoa farmers rely on stable prices to make investment decisions; however, with prices fluctuating widely due to climate impacts and supply shortages, long-term financial planning remains challenging​.
Smuggling driven by price disparities
Price differences between Ghana and Ivory Coast have intensified cocoa smuggling across borders. When Ivory Coast recently raised its farmgate price, cocoa from Ghana, where prices remained lower, was increasingly sold illegally in neighboring countries​.
This shift has contributed to Ghana’s loss of approximately 160,000 metric tons to smuggling in 2023 alone, despite efforts to stabilize prices through the Ghana Cocoa Board​.
Although Ghana raised its farmgate price by 45 percent in the current season, Ivory Coast’s higher pricing continues to attract cross-border smuggling, underscoring the need for more coordinated pricing policies across the region.
The smuggling of cocoa undermines the formal economy, depriving Ghana and Ivory Coast of revenue that could be reinvested in local agricultural development and infrastructure.
Without effective intervention, these practices will continue, destabilizing both national economies and global supply chains.
Adaptation and policy recommendations
The Côte d’Ivoire-Ghana Cocoa Initiative (CIGCI) has taken action to increase farmer incomes and exert more control over cocoa prices in response to these intricate issues.
Although collaborative initiatives such as the LID are a step forward, stakeholders concur that further assistance and collaboration are necessary. Both nations’ leaders are pushing for international collaboration to finance sustainable farming methods and for acknowledgement of the impact of climate change on the cocoa supply chain.
The sustainability of cocoa cultivation in West Africa also depends on increasing support for agricultural innovation, such as drought-resistant cocoa cultivars and environmentally friendly pest management techniques.
Experts claim that greater technological investment, such as better disease control methods, will help shield harvests from dangers like swollen shoot virus, which is a major contributor to crop loss in Ghana.​
