In October 2025, Ghana’s Finance Minister, Dr. Cassiel Ato Forson, announced a roughly 12 percent increase in the nominal cocoa producer price, raising it from GH¢51,660 to GH¢58,000 per tonne for the 2025/2026 season. The adjustment came at a time when global cocoa prices were still elevated after a sharp surge.
However, international prices began to decline soon after October, as reflected in the International Cocoa Organisation’s daily price series. This created a gap between the fixed domestic producer price and the falling world market value. The consequences were immediate: licensed buyers struggled to purchase at the official rate, some deliveries went unpaid, and market activity slowed considerably.
The subsequent decision to cut the producer price by about 29 percent has now sparked concerns over increased smuggling of cocoa beans into Côte d’Ivoire, where the official producer price remains comparatively higher. On the surface, this concern appears reasonable. Following Ghana’s adjustment, the official Ivorian producer price is now roughly 27 per cent higher than Ghana’s.
But official prices alone do not determine incentives. Market reality matters more. Evidence from buyers indicates that, despite Cote d’Ivoire’s unchanged official price, transactions are occurring below the announced level, with farmers reportedly receiving between US$2.72 and US$3.63 per kilogram, averaging about $3.17/kg. At these effective market prices, Ghana’s revised producer price is still approximately 16 per cent higher.
This implies that the immediate incentive for smuggling into Côte d’Ivoire is weak. If anything, the opposite pressure could emerge. The episode highlights a broader lesson: when domestic producer prices become disconnected from world prices, market distortions arise quickly.
The debate
Tying producer prices more closely to market fundamentals may be difficult in the short term, but it helps prevent payment delays, restores liquidity across the supply chain, and ensures stable incentives for both farmers and buyers. The current discussion should therefore move beyond headline comparisons of official rates and instead focus on the actual prices farmers receive. In commodity markets, it is reality—not announcements—that shapes incentives.
The writer is an Associate Professor of Economics at the University of Ghana’s Institute of Statistical, Social and Economic Research (ISSER).
Email: fdzanku@ug.edu.gh
