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Cocoa prices to rise in 2020? (Part 1)

As the Coronavirus pandemic is expected to expand before reaching its peak, some countries have taken effective measures against the spread of the lethal disease. One such measurement is the act of the National Identification Authority (NIA) in Ghana to suspend the mass registration of the citizens of the country. Local correspondents are reporting that, since the announcement of the news, some regions in Ghana were hit by the “ghost town” phenomenon.

How is that going to affect the cocoa price?

Before we answer to that question we have to understand what processes are interrupted by the global pandemic of Covid-19.

In West Africa, agriculture has continued to play a dominant role in the provision of food, raw material for industries, employment for the majority and foreign earnings which are used in financing development activities. Among the perennial tree crops, cocoa sector is of particular interest for some parts of West Africa and for the global chocolate industry. In Africa, cocoa production is dominated by four West-African countries. Côte d’Ivoire and Ghana produce approximately 41 percent and 17 percent of the world output respectively. The other two important producers are Cameroon and Nigeria each contributing approximately five percent of the world cocoa production (Binam et.al, 2008).

If you would like to learn more about the cocoa production in Ghana you can read it in this study: https://www.researchgate.net/publication/283773308_Economic_analysis_of_cocoa_production_in_Ghana_The_case_of_eastern_region

The Eastern Region of Ghana

This Saturday (21/03/2020), the regional correspondent of Happy FM, Kwasi Baah reported in an interview that he has visited the town of Suhum (GA). Suhum is a town and the capital of the Suhum/Kraboa/Coaltar district of the Eastern Region. The Eastern Region is the sixth largest region in terms of land area, but more importantly it is the second in terms of cocoa production in Ghana, accounting for about 19 % of the total cocoa production in Ghana.

Photo from the town of Suhum, Ghana.
Photo from the town of Suhum, Ghana.

“A lot of people are scared, I visited Suhum today and the streets were deserted.”

Kwasi Baah

After Ghana has confirmed positive cases of the deadly Coronavirus, a ban on public gathering was issued by the President Nana Akufo-Addo. Following the public announcement, more and more people have chosen to stay close to their homes and not to stroll on the streets. Evidently this is what is happening in the Eastern Region. Some cocoa farms which are located in the area are those in Nankese, Amanhia, Suhum and Ayisaa. Approximately 1/10 of the district’s population (3 171 800 people in 2018) is working in the cocoa production business.

 The majority of the Ghanaian farmers, from the region, involved in the cocoa production are in the so-called active age (< 60). Fadipe et al. (2012) in their study had the mean age of the respondents to be 59.4 years and more than 65 percent of the respondents are above 40 years of age. This implies that more old people are involved in the production of cocoa in the study area. This was seen as a great benefit, especially having in mind that the government is relaying on people with experience to manage the younger population. Recently though this might be seen as a downside as the Covid-19 is badly targeting people over 40.

Having in mind the fear from the newly spreading disease, the reported (in the World Fact Book from 1999), 3.2 million Ghanaians involved in the production of cocoa in the country is expected to be reduced for a while.

(Continues in Part 2)

Written by: Lyubomir S. Evtimov

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