The Africa Policy Lens (APL) has warned of dire consequences for cocoa farmers and rural communities in general, following government's reduction of price of cocoa.
In a comprehensive statement it released analysing government's decision, its impact on cocoa farmers and the way forward, the APL said the price reduction will
"undermine farmers’ livelihoods, threaten food security, and aggravate Ghana’s export-earnings volatility."
"In the medium term, the cut may marginally ease COCOBOD’s financial burden and boost exports by making Ghana’s beans more competitive; but it will also undermine farmers’
livelihoods, threaten food security, and aggravate Ghana’s export-earnings volatility.
The APL, which blamed management of COCOBOD for the situation, noted that the
policy shift was not foreshadowed in the 2025 budget, thus raising concerns about fairness and transparency.
"Cocoa remains the primary income source for approximately 800,000 Ghanaian farming
households, making it a critical pillar of rural livelihoods. Even before the announced haircut, available evidence (including analyses by Oxfam) indicated that up to 90% of cocoa farmers were not earning a living income and were subsisting on less than $2 per
day,'' the APL said.
The APL continued that available data clearly suggests that the reduction in prices will severely impact welfare of already impoverished households, totalling about 3.2m people.
"Based on estimates from the Ghana Statistical Service that rural households average
four persons, any sustained reduction in farmgate prices has wider household welfare
implications beyond individual farmers. A 28.6% price reduction could therefore affect the economic stability of roughly 800,000 farming households, equivalent to approximately 3.2 million rural residents, by directly reducing disposable income and increasing vulnerability to poverty."
"In practical terms, a farmer expecting to sell 10 tonnes would now earn about GH₵170,000 instead of GH₵240,000, representing a revenue reduction of roughly GH₵70,000 (about $5,000), with likely downstream effects on consumption, education spending, and local rural economies."
The APL said the impact of the haircut means more households will see school dropouts, sale of assets to supplement shortages as well as reduction in healthcare expendituee.
"Already, farmers across the country have reported severe hardship. The average household earnings of some farmers are around $0.60 per person per day from cocoa. The new cut means even less cash. We expect the immediate effects to include deeper food insecurity, school drop-outs, and the inability to afford farm inputs. Poorer households may be forced to sell assets or cut back on health spending. Rural women – who often manage household nutrition and sometimes assist on farms – will bear a heavier burden as household incomes
fall."
The APL also analysed that the cocoa price haircut has significant implications for the structural drivers of illegal
mining (Galamsey) in Ghana, particularly through the income substitution mechanism.
"Cocoa farming and small-scale mining compete directly for rural labour and land; when cocoa returns decline, the relative attractiveness of mining despite environmental and legal risks increases. Lower farmgate income reduces liquidity for farm maintenance, replanting, and hired labour, which can accelerate farm abandonment or shifts into mining activities."
"From a political economy perspective, this weakens incentives for sustainable land stewardship and undermines ongoing efforts to formalize and regulate natural resource use, potentially reversing gains made in environmental protection and community-based
conservation initiatives."
The APL also expressed concern over how such reduction sends negative signal to rural youth considering career pathways.
"The cocoa sector already faces an ageing farmer population, and expectations of declining profitability risk reinforcing perceptions that cocoa farming is economically stagnant compared to alternative livelihoods."
"Youth respond strongly to income visibility and future prospects; when cocoa prices fall sharply, the sector may
appear structurally insecure, pushing younger entrants toward urban migration or
extractive activities that promise quicker returns."
"This erosion of intergenerational continuity in a crop that once represented stability and national pride risks losing its aspirational appeal, complicating efforts to sustain rural economies and maintain a resilient agricultural workforce."
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