By Hon. Joseph Cudjoe
Fmr Investment Manager, Ghana Cocoa Board
Fmr MP, Effia Constituency
Fmr Minister for Public Enterprises
Background
It is on public record that President John Dramani Mahama and the current Chief Executive of COCOBOD, Dr. Randy Abbey, openly criticised and rejected COCOBOD’s forward sales strategy, which had earlier been used consistently by the Board under the previous administration.
In their criticism forward sales were portrayed as bad judgment, poor timing and a disadvantage to cocoa farmers. This uninformed public posture blinded the current administration from realizing the huge opportunities which the recent unprecedented and historic high prices of cocoa presented to us to have made farmers cash in.
What the Market Offered Ghana
For the period April 2024 and 2025, the world cocoa market experienced something never seen before. Cocoa prices rose to record highs, far above anything in history Prices crossed the US$10,000 per tonne mark, and at one point hit almost $13,000 per tonne of the commodity. This was not a normal market price of cocoa. It was a once-in-a-generation price spike.
Why Forward Sales Were the Right Strategy To Lock Have Locked In These Price Hikes
Forward sales are simple to understand:. When prices are unusually high, you lock them in for future production and delivery of cocoa so that you continue to deliver cocoa at those high prices. This is just like how banks rush to give fixed rate loans when they see interest rates are going to fall so that they would still have loans on their books earning the high past interest rates.
That is exactly why COCOBOD had used forward sales for decades: to protect and stabilize the income to farmers Under the NPP Administration, this approach worked consistently.
The Missed Opportunity
The current administration woefully failed to use the recent historic high price spikes of cocoa to:
• Lock in strong prices for 2025/26 and 2026/27,
• Secure better revenues for farmers,
• Strengthen COCOBOD’s cash flow,
Shortly after the historic high prices; global cocoa prices fell sharply from their peaks. The opportunity has disappeared Ghana’s cocoa farmers have been left exposed not only to lower prices but also to the cure t cash flow problems.
Therefore, that single policy posture has cost cocoa farmers billions of dollars in lost value over the next seasons.
This Is the Simple Truth
Forward sales did not hurt cocoa farmers but failure to use this strategy has hurt them.
When prices were at historic highs, Ghana should have locked them in.
That is what prudent commodity management demands.
My Concluding Remarks:
1. The previous administration’s use of forward sales contract to manage price risk was sensible, protective of of cocoa farmers and forward-looking
2. Rejecting it it loudly and publicly has blinded the current admiration to lose huge opportunity to have made farmers better off at this time instead of exposing them to nonpayment by LBCs. This has been a very big and costly error.
3. Cocoa farmers are now paying the price, not because of forward sales, but because the opportunity to use them wisely was ignored.
