Cocoa products shortage looms, local processing companies likely to shut down

If your favourite cocoa product is now scarce on the market or you are buying it at a higher price, then this is the reason.

Cocoa processing companies in Ghana have had their operations strained due to a decreased supply of cocoa beans resulting from recent low cocoa production and the increase in cocoa prices on the international market.

The situation has forced many local cocoa processing firms to alter their way of doing business to minimise expenses as they contend with squeezed profit margins.

Citi Business News has gathered that there is a looming crisis in the cocoa processing industry and many of the local cocoa processing companies in the country have been hit by the low yields.

They are no longer getting the quantity of cocoa beans needed to meet their respective operational capacities. This limited availability of cocoa beans has forced a number of them to reduce production levels.

This has resulted in the underutilization of machinery, leading to inefficiencies and higher per-unit costs.

Some of them have had their processing schedules disrupted as they struggle to maintain steady operations.

Citi Business News has learnt that confectionery items like chocolates, spreads, and pebbles produced by the Cocoa Processing Companies have experienced an all-time decline of 30 per cent due to their inability to raise revenue to increase the processing of cocoa beans.

In terms of production, processed cocoa beans fell by 50 percent, with the production of cocoa liquor, butter, and powder dropping from 3,000 to 1,400 metric tonnes.

This is happening at a time when the company has already recorded a US$ 6 million loss in the first quarter of 2024.

The decline in cocoa production in the country has largely been blamed on the devastating effects of illegal mining, poor weather conditions, and the swollen shoot disease.

Some farmers are exchanging large acres of cocoa farms for as low as GHS 50,000.  Additionally, the smuggling of cocoa to neighbouring countries is another major challenge.

Ghana’s cocoa output for the 2023/24 season is expected to be almost 40% below a target of 820,000 metric tonnes when global cocoa prices hit US$ 10,000 per tonne this year.

In the first four months of 2024, Ghana’s trade balance narrowed after cocoa exports dropped. On a year-on-year comparison, cocoa output fell by about 50%.

Chocolate lovers in Ghana, for example, are now feeling the crunch as prices skyrocket. They are now paying more than GHS20 cedis for a 100g bar of Kingsbite chocolate, up from the GHS 14 it was selling for a few months ago.

The upward price adjustments could be a way for the Cocoa Processing Company to raise revenue and turn things around.

Consumers might be shifting to cheaper alternatives, but the reality is that the sales volumes of other businesses may not be meeting demand.

Other cocoa processing companies, such as Niche, Chocomac, and Cargill, are facing different levels of operational bottlenecks due to the scarcity of cocoa beans, according to Citi Business News sources

Should this situation persist, it may lead to massive job losses and a likely shutdown of some of these cocoa processing companies.

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