Ghana Delays Cocoa Deliveries, Exacerbating Global Chocolate Supply Crisis

Ghana, the world's second-largest cocoa producer, is facing a deepening supply crisis and is set to delay delivery of up to 350,000 tons of cocoa beans to the next season, according to a report by Reuters citing sources familiar with the matter.

This decision further exacerbates the global chocolate industry's struggle to secure sufficient cocoa beans, already grappling with a third consecutive year of poor harvests in Ghana and Ivory Coast, the source of 60% of global cocoa production.

"The world's second largest cocoa producer Ghana is looking to delay delivery of up to 350,000 tons of beans to next season due to poor crops," the Reuters report states.

The market had previously anticipated that Ghana would roll forward approximately 250,000 tons of cocoa, but this figure has been revised upwards to 350,000 tons, equivalent to about half of Ghana's current crop.

Ghana's cocoa crop has been severely impacted by adverse weather conditions, bean disease, and illegal gold mining activities, which often displace cocoa farms. Additionally, Ghanaian farmers are increasingly smuggling cocoa beans to neighboring countries to sell at higher prices than the state-set purchasing price, further depleting the already limited supply.

"Five sources with knowledge of the matter said Ghana pre-sold some 785,000 tons worth of beans for the current 2023/24 (October-September) season, but will likely only be able to deliver some 435,000 tons," the Reuters report reveals.

This situation has made it difficult for Ghana to fulfill its forward sales commitments for the next season, forcing the country to rely on a smaller pool of beans sold at significantly lower prices.

"Sources said the 100,000 tons, like the 350,000 tons being rolled into next season, were sold at less than a half of current world cocoa prices, meaning Cocobod will struggle to increase farmer prices next season based on these sales," the Reuters report states.

The inability to increase farmer prices could further incentivize bean smuggling, leading to a decrease in the supply of cocoa beans available for export and further exacerbating the global cocoa shortage.

The International Cocoa Organization forecasts a 10.9% decline in global cocoa production this season, meaning chocolate processors will have to rely on existing stocks to meet demand. The market is grappling with the most significant cocoa shortage in 45 years.

"This means processors and chocolate firms will have to draw on cocoa stocks to fully cover their needs," the Reuters report concludes.

The ongoing cocoa crisis is forcing chocolate makers around the world to raise prices for consumers. Earlier this year, companies behind chocolate brands like Hershey and Cadbury indicated that further price hikes remain a possibility in response to the continued surge in cocoa prices.