Cocoa industries in Ghana and Cote d’Ivoire face financial and climate risks

The cocoa industries in Ghana and Cote d’Ivoire are facing significant financial and environmental pressures. An International Monetary Fund (IMF) report has flagged Ghana’s Cocoa Board (COCOBOD) for fiscal risks stemming from poor hedging strategies. In 2023, COCOBOD entered forward sales contracts at prices significantly lower than the actual market surge, resulting in losses of hundreds of millions of dollars and preventing the country from benefiting from high global cocoa prices.

The IMF recommends that Ghana’s Ministry of Finance closely monitor COCOBOD due to its high leverage and market exposure, noting that the institution’s financial health impacts approximately 800,000 farmers. The board's performance has reportedly deteriorated since 2020.

Simultaneously, Fitch Solutions has warned that El Nino weather patterns threaten cocoa yields and food security in the region. Reduced rainfall and higher temperatures during the October-December period could lower cocoa pod development, impacting export earnings and government revenue. The firm also noted that El Nino could exacerbate food inflation and social unrest, particularly as Ghana and Cote d’Ivoire rely heavily on imported rice.