The Cocoa Roundtable Initiative (CORI) has identified imbalance between demand and supply as one of the major drivers of the current global downturn in cocoa prices.

The Director-General of CORI, Comrade Adeola Adegoke, who disclosed this at the weekend, said when cocoa prices peaked at about $12,000 per ton in 2024 on the international market, it was largely due to low production levels in Ghana, Côte d’Ivoire, Cameroon, and Nigeria, with a production shortfall estimated at about 180,000 metric tons (MTS) by the ICCO.

He said: “Several factors have also contributed to this situation, including climate change (El Niño), low productivity per hectare (300kg to 500kg in most African countries), urban expansion, and competing government interests in other agricultural commodities. For example, Ondo State, despite being the largest cocoa-producing state in the country, has prioritised oil palm expansion over cocoa intensification under past administrations.

“Other contributing factors include pests and diseases, inconsistent government policies, inadequate infrastructure, pre- and post-harvest losses due to knowledge gaps, limited climate management techniques, and exposure to international market volatility. This volatility is further worsened by the continued use of outdated models by most African cocoa-producing countries, without reforms to accommodate regional bloc integration similar to OPEC in the petroleum sector, which regulates supply (glut) in the international market.”

Adegoke noted that Nigeria, in particular, operates a free market system following the dissolution of the Cocoa Board in 1986. “While the country benefited from the peak cocoa prices in 2024, it is now experiencing the adverse effects of the current market downturn.

This decline threatens to erode the gains previously recorded in the sector, as prices have fallen to unsustainable levels that no longer accommodate profit margins or rising input costs. Notably, input costs in the open market have remained unchanged.”

He noted that government intervention is necessary to ensure the survival of smallholder cocoa farmers, noting that without such intervention, there is a high risk of compromised quality control, reduced premium production, and increased poverty among cocoa farmers, as their per capita income continues to decline.

“The Living Income Differential (LID), currently adopted by Ghana and Côte d’Ivoire, has not sufficiently mitigated the impact of falling cocoa prices as expected. While the LID initiative is commendable, the current condition of smallholder cocoa farmers in these countries; as well as in others yet to adopt the initiative, remains concerning due to the persistent decline in international cocoa prices. The limited visible impact of the LID at present calls for careful evaluation, especially for countries considering its adoption.

“Nevertheless, we commend the efforts of governments over the years in sustaining the production capacity of the continent, which continues to dominate global cocoa production despite numerous challenges.

“We reiterate our call for greater transparency and information-sharing from the two leading cocoa-producing countries to jointly address the effects of the LID on the current downturn in cocoa prices. Ghana and Côte d’Ivoire together contribute about 60 per cent of Africa’s cocoa production, out of the continent’s 70 per cent share of global supply,” he said.

He reiterated that the immediate and long-term solution lies in the establishment of a regional bloc by African cocoa-producing countries, similar to OPEC, to regulate the sale of cocoa on the international market, saying the move would help manage the forces of demand and supply, which ultimately determine cocoa prices.

“Another recommendation is the review of existing laws guiding the operations of boards responsible for the regulation and marketing of cocoa beans. These laws should be updated to address current and future challenges related to cocoa price volatility, with a strong emphasis on regional integration and collaboration to enhance Africa’s influence on global cocoa pricing. Collaboration and cooperation among cocoa-producing countries in Africa are essential for the sustainability of the sector.

“The politicisation of the cocoa sector in the region must be discouraged to create better opportunities for growth and investment. Policies should promote processing, value addition, and farmer-centric approaches, regardless of the political party or government in power.

“In Nigeria, there is a need for a regulatory board that will oversee, support, implement, and enforce policies that protect the country’s cocoa agenda, without being directly involved in the buying and selling of cocoa. Such a board, if established, would regulate industry practices, protect stakeholders, ensure compliance with market standards to guarantee access, and enforce policies that safeguard both operators and consumers across the value chain. The board must prioritize farmer support to ensure sustainable production, improved productivity, and enhanced welfare, thereby guaranteeing better income for cocoa farmers.”