Mahama Cocoa Price Reduction: Otukonor Fires Opposition Critics

A leading government representative, Peter Boamah Otukonor, has defended the recent Mahama administration’s cocoa price reduction structure, attributing current challenges in the sector to past pricing strategies and sharp declines in international cocoa prices. Speaking in an interview on the state of the cocoa industry, Mr. Otukonor explained that previous administrations relied heavily on futures market strategies, locking Ghana into long-term contracts at fixed prices. According to him, this limited the country’s ability to fully benefit from rising global cocoa prices.

Locked Futures and Farmer Earnings

He alleged that Ghana was locked into a $10,200 per tonne futures contract for nearly three years, a move he said prevented significant farm-gate price increases during the early years of the previous government. “At a point when the international spot price was hovering around $10,000 per tonne, farmers were reportedly receiving less than 25% of the Free-On-Board (FOB) price,” he claimed. He further cited 2024 figures where cocoa traded at about $12,000 per tonne on the futures market, yet farmers were reportedly paid around $3,200. According to him, this pricing gap left many cocoa farmers unable to benefit from favorable international market conditions fully.

Global Price Drop Creates New Pressure

Mr. Otukonor noted that the situation has since shifted dramatically, with global cocoa prices falling from approximately $12,000 per tonne to about $4,100. He explained that when prices were stronger—around $7,000 per tonne last year—the government increased the producer price from GH¢2,811 per bag to GH¢3,200, and later to GH¢3,600. However, with international prices now declining sharply, Ghana is reportedly struggling to break even on cocoa purchased at the higher local rate. “We are currently unable to sell some of the cocoa purchased at $3,600 equivalent and break even on the international market,” he said, adding that Ghanaian cocoa is now considered relatively expensive compared to competing origins.

Backlog and Payment Challenges

The pricing mismatch has created two key challenges, he said: difficulty paying farmers promptly and an accumulation of unsold cocoa stocks. To address this, he revealed that the government has decided to adjust pricing and pay up to 90% for cocoa already purchased under the revised structure. He also announced that outstanding cocoa supply contracts—estimated at 350,000 metric tons—have now been fully cleared. “Going into the 2026/2027 cocoa season, there is no backlog hanging over COCOBOD and the farmers,” he stated. He added that cocoa export earnings rose significantly last year, generating between $3.2 billion and $3.5 billion, compared to approximately $700 million in 2024 and $600 million in 2023.

Blended Pricing Strategy Going Forward

Responding to concerns that reliance on spot pricing contributed to the current difficulties, Mr. Otukonor defended the strategy but acknowledged the need for a balanced approach. He disclosed that going forward, Ghana will adopt a blended strategy—combining spot sales and forward contracts—supported by improved price forecasting. Collaboration with neighboring Ivory Coast will also be key, he noted, as both countries play major roles in global cocoa production. He further explained that 50% of cocoa beans from the 2026/2027 farming season will be directed into local processing, while the remaining 50% will be managed under the new blended export strategy.

Support for Farmers

Despite the price adjustments, Mr. Otukonor insisted farmers are better positioned due to reduced production costs.

He cited government support measures, including

• Free fertilizer distribution
• Free agrochemical supply
• Free mass spraying exercises
• Expanded agronomic support services

He argued that these interventions significantly reduce farmers’ cost of production and improve overall profitability.

Politics and the Cocoa Sector

On whether Ghana’s cocoa sector has become overly politicized, Mr. Otukonor acknowledged the political sensitivity surrounding the industry. “The cocoa sector cannot be separated from politics because it is central to Ghana’s economy and rural livelihoods,” he said. However, he emphasized that both government and opposition must prioritize farmer welfare, value-chain development, and job creation for young people.