Ghana will increase the state-guaranteed price paid to its cocoa farmers by nearly 45% for the 2024/25 crop season, two sources with knowledge of the price review told Reuters, to help boost their incomes and deter bean smuggling out of the country.

The world’s number two cocoa producer raised the farmgate price by more than 58% to 33,120 cedi ($2,123.08) per metric ton, or 2,070 cedi per 64 kilogram (kg), in April for the rest of the 2023/24 season.

The mid-season price hike came after top cocoa producer, neighbouring Ivory Coast, raised its farmgate price to 1,500 CFA francs (US$2.55), or around 40 cedis, per kg for the April-to-September mid-crop of the 2023/24 season, up from 1,000 CFA francs last season.

One source said Ghana’s cocoa producer price review committee had pegged the price at 48,000 cedi per ton, translating to 3,000 cedi per 64 kg of cocoa, for the 2024/25 season due to begin later in September, an increase just shy of 45%.

The source said the decision would be sent to the cabinet pending an announcement.

Both sources asked for anonymity because the decision is not yet public.

The second source said it was unlikely that the cabinet would change the committee’s decision, saying also the price could not be increased beyond 48,000 cedis per ton without pushing Cocobod, Ghana’s cocoa marketing board, into a deficit.

Ghana’s price will also have to align with Ivory Coast’s 2024/25 farmgate price, which has yet to be announced, the person added.

The two biggest cocoa-growing countries set up an initiative to coordinate farmgate prices and cocoa supplies to help sustain the sector and boost their farmers’ incomes.

Cocoa prices have been buoyant this year as disease and adverse weather in Ghana and Ivory Coast, which together supply more than 60% of the world’s cocoa, pushed the market to a third successive deficit.

The International Cocoa Organization on Thursday raised its global cocoa deficit forecast for the 2023/24 season (October-September) to 462,000 tons from 439,000 tons, saying the market was headed for a 45-year low stocks-to-grindings ratio.

Cocobod previously planned to launch the 2024/25 season on Sept. 1, earlier than usual, with a reduced production target of 650,000 tons, but both sources said the opening will be later.

Opening the season earlier was aimed at helping reduce bean smuggling, which has been incentivised by low prices and delayed payments to farmers.

Some of Ghana’s cocoa farmers and licensed buyers accused both sides of hoarding beans to benefit from the proposed price hike in the new season.