(Bloomberg) -- Ghana is considering paying cocoa farmers up to twice as much for their beans in order to stop them from selling to neighboring countries for higher prices — the latest in a series of repercussions following a global shortage.

Industry regulator Ghana Cocoa Board is in talks with the government to approve a higher farmgate price, according to people familiar with the matter. The scale of the discussed increase is between 50% and 100%, one of the people said, asking not to be named because the details are not yet public.

If Ghana — the world’s second-biggest producer of the chocolate ingredient — proceeds with the pay boost, it would mark the first time that the country raises farmers pay twice during the main crop season, which started last September and ends on June 30. Ghana already raised the rate by 63.5% to 20,928 cedis ($1,567) a ton at the beginning of the period.

Cocoa futures in New York have soared to multiple records in recent months after bad weather and disease hurt African output. The rush to secure supplies first pushed prices higher, but futures have now more than doubled this year as margin calls and forced buying put traders under stress. 

The spike in wholesale markets means the share received by Ghanaian farmers has dwindled to 16% from 44% seven months ago, when the government last updated the farmgate price. Even if farmer pay doubles, it will remain far below levels on the world market.

A spokesperson for Ghana Cocoa Board did not respond to telephone calls and text messages seeking comment.

The world’s top grower Ivory Coast — which also operates a controlled market like Ghana — on Tuesday raised farmers’ pay for the mid-crop harvest by 50% to 1,500 CFA francs ($2.47) per kilogram. Their decision may be influencing Ghana to act.

A higher farmgate price could help ease the global cocoa shortage as growers would have more incentive to hand over beans for processing and export. There’s been concern some are holding back deliveries in the hope of higher prices. An increase may also spur investment in farms where trees are aging and vulnerable to disease.

The amount of beans Ghana has lost to smuggling in the current season is about 250,000 tons, one of the people said, compared with an estimate of 150,000 tons a year earlier. Smuggling, weather, disease and a lack of fertilizers are impacting Ghana’s harvest tally, which is set to drop to as low as 422,500 tons in 2023-2024, from 650,000 tons in 2022-2023.

Bean arrivals at Cocobod’s depots since the season began remain below 400,000 tons, and a further increase in the producer price is crucial if the regulator wants to receive more, the people said.

©2024 Bloomberg L.P.