Boston, MA -- (SBWIRE) -- 05/23/2014 -- We expect to see cocoa prices growing in the coming years on the back of production deficits and recovering demand in Europe. This should spell good news for the Ghanaian cocoa industry, but our growth forecasts are tempered by concerns over the future of government support. Cocoa plantations are badly in need of the improved crops and fertiliser inputs the state has provided. Corn production is expected to fall slightly as acreages have been reduced, but we see output recovering to the 2012/13 level by the end of the forecast period as government and non-governmental organisations (NGO) support leads to improving yields. Consumption of livestock products is expected to increase at a moderate pace as economic growth will see urban households increase their animal protein intake. Domestic output of poultry, pork and beef will be modestly successful as overseas competitors stand to gain the most.

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Key Forecasts

- Cocoa production growth to 2017/18: 26.7% to 1.1mn tonnes. Most of this growth will be due to base effects, however, we also expect significantly higher cocoa prices over the medium term owing to poor supply
- Corn production growth to 2017/18: 0.0% to 2.0mn tonnes. Ghanaian corn yields remain low in relative terms, with production still dominated by smallholders making limited use of fertilisers, mechanisation, improved seeds and post-harvest facilities. Although we see stagnant growth over the forecast period, it should be noted that 2012/13 was an exceptional year.
- 2014 real GDP growth: 5.1% (down from an estimated 6.6% in 2013; predicted to average 6.4% from 2014 to 2018).
- 2014 consumer price inflation (eop): 11.9% (down from 13.5% in 2013).

Industry Developments

The Ghanaian currency, the cedi (GHS), lost almost a fifth of its value against the US dollar over the course of 2013. Although we expect the rate of depreciation to slow in 2014, the current account deficit will likely remain sizeable at around 10.0% of GDP amid lower prices for gold and oil exports. The weakness of the cedi has meant that the minimum price offered by the government to producers in the local currency is worth less that that put in place by the authorities in neighbouring Cote d'Ivoire. This has encouraged smuggling across the border between the two countries as it is cost effective for smugglers to pay a higher price than the government to Ghanaian farmers. Local reports suggest that smugglers have trafficked around 40,000 tonnes of Ghanaian cocoa beans into Cote d'Ivoire since November 2013. This will reduce cocoa bean available for local processing and poses a risk to our consumption forecasts, which are based on grindings.

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