This is an audio transcript of the Behind the Money podcast episode: ‘How high gold prices are fuelling a chocolate shortage’
Michela Tindera
Lately, the price of gold has been exploding.
News clips
The price of the precious yellow metal on the rise.
Gold made history, smashing record highs.
Prices for the precious metal briefly top $3,000 an ounce today for the first time.
Michela Tindera
And this increase has a lot to do with what’s happening around the world. US President Donald Trump’s tariff threats, geopolitical tensions — it’s making investors want to put their money somewhere secure.
Susannah Savage
So whenever things are really uncertain, people don’t know what’s gonna happen next, they tend to move their money into gold.
Michela Tindera
Gold is what’s known as a safe haven asset.
Susannah Savage
It’s because, you know, it’s never gonna go too crazy. If you’re an investor and you’re investing in stocks of a company, that could suddenly tank because the company’s hit by tariffs or some other legislative change. Whereas gold is always going to be gold.
Michela Tindera
But as more investors pile into gold and push the price up even higher, that’s leading to some unexpected consequences. Let’s consider a country like Ghana. It’s one of the world’s largest producers of gold. So you’d think this news would be good for the people living there. But this demand is actually impacting another super important commodity.
Susannah Savage
Ghana produces a lot of gold, but it also produces a lot of cocoa. Cocoa’s the key ingredient in making chocolate. And these two are linked.
Aanu Adeoye
The two commodities are pretty much in competition in a way. And so if you want to take gold from the ground, you’re essentially going to have to destroy farmlands that are used to grow cocoa and other crops in Ghana.
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Michela Tindera
I’m Michela Tindera from the Financial Times. Ghana’s economy is propelled by commodities. It’s the world’s second-largest producer of cocoa beans, and it’s also a major exporter of gold.
Today, on Behind the Money, we’re gonna be exploring how investing in a safe haven asset is making a lot of things in Ghana’s economy quite insecure. It’s playing a role in environmental destruction and putting a squeeze on the already struggling cocoa industry.
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Ghana has long been known for its gold deposits. During colonial times, the British called it the Gold Coast. But in more recent times, as the price of gold has ticked up and up, the sector has become even more appealing.
Aanu Adeoye
Ghana has always had loads of gold. People have always worked in the industry. But now that you have global uncertainty, it makes it even more enticing to people who want to engage in the trade.
Michela Tindera
That’s the FT’s west and central Africa correspondent, Aanu Adeoye. He lives in Lagos, Nigeria, and he recently took a trip to Ghana to see for himself just how attractive the trade has become for the people living there.
Aanu Adeoye
I remember that day so well because I had to wake up at 5am for a 7am flight to Ghana. It’s not a long flight by any means. It takes about 50 minutes to fly from Lagos to Ghana’s capital, Accra. And if your pilot really steps on the gas, it could be done in 40, 50 minutes.
Michela Tindera
From Accra, Aanu rented a car and went for a three-hour long bumpy ride to see some mining towns.
Aanu Adeoye
They’re rural, very rural villages. They have just one main road running through both places.
Michela Tindera
When he got there, he told me that he noticed how gold mining’s effects on the area were impossible to miss.
Aanu Adeoye
There were loads of farmlands, just land that had been dug up using excavators. You could also see that a lot of them had been flooded with water. And so if you go around, you know, the villages I went to, you see that the main bodies of water have turned brown.
Michela Tindera
Aanu’s describing one of the main issues with gold mining in Ghana. There can be loads of environmental destruction. The mining is often done illegally without the proper licences and permits from the government.
Aanu Adeoye
I remember going to see Birim River, which is one of the main rivers in Ghana. And when I went to see it, it was a sight for sore eyes, you know, it was basically like a chocolate drink, you know, with the colour it had on.
Michela Tindera
Miners use heavy-duty excavators to break up the soil. Then they flush it with loads of water and chemicals like mercury. People then pan for gold in the polluted water.
Aanu Adeoye
It is incredibly destructive. It’s terrible for water bodies in Ghana. There are experts who think that Ghana might have to start importing water as soon as 2030, which is only five years away.
Michela Tindera
So this surge in demand for gold is intensifying miners’ impact on Ghana’s environment. But there’s more. Aanu also learned that some of the people who are doing this illegal mining have ended up here more out of circumstance than because they actually wanna be spending their time hunting for precious metals.
Aanu Adeoye
So I met a 32-year-old man in Osino, which is a gold rush town in Ghana’s east.
Michela Tindera
This man that Aanu spoke with used to work in construction as a carpenter.
Aanu Adeoye
He told me he was part of the many people who worked on building the new building for the Bank of Ghana, which is Ghana’s central bank in the capital, Accra. But because of inflation pressures and the pressures of taking care of his kid and two younger siblings, he had to quit those jobs because he wasn’t making a lot of money and switch to illegal gold mining, scavenging with five others.
Michela Tindera
By doing this kind of work, he’s risking being arrested by the police. But it’s a chance that he and others are willing to take. Unemployment among young people in Ghana is high, so their options to make money can be quite limited.
Aanu Adeoye
So he said, I was afraid when I started, but you can’t steal and you have to work. Otherwise, hunger will kill you. So you know, his take on the matter is, look, I need to work. I have people to take care of, and I have all of these responsibilities. And, you know, what’s the alternative?
Michela Tindera
As gold prices reach record highs, it seems unlikely that this trade will slow down. And that’s a problem for another important Ghanaian export: cocoa. You see, for the last few years, cocoa production in Ghana has been struggling. Last year, yields plunged 20 per cent.
Susannah Savage
The cocoa industry is in crisis. Now, it’s kind of a perfect storm. There’s a whole cluster of problems hitting cocoa farmers.
Michela Tindera
That’s the FT’s commodities correspondent, Susannah Savage. She’s been reporting on this with Aanu.
Susannah Savage
Weather patterns have changed and this has made it harder to grow cocoa. On top of that, there’s been chronic under-investment in cocoa plantations. The trees tend to be very old, and that makes them more vulnerable to climate change. It also makes them more vulnerable to disease. And in the last year or so, we’ve seen an outbreak of a couple of diseases affecting cocoa trees, which all of this has had a really big impact on yields.
Michela Tindera
This decline in production has already made its way to the chocolate makers. Maybe you’ve even noticed that the price of your favourite candy bar has gone up or gotten smaller. But back in Ghana, throwing the cocoa industry even more into a spiral is gold miners’ interest in the land. It turns out cocoa farms and gold deposits are often found in the same place.
Aanu Adeoye
So both of them are very crucial to Ghana’s economy, right. But unfortunately, both of them overlap. Most of the land that people use to farm, you can also find a lot of gold buried underneath.
Michela Tindera
This practice of destroying farmland to access gold is upending the lives of Ghanaian farmers and their industry. Aanu met with one young farmer while he was out reporting who experienced this first-hand.
Aanu Adeoye
So I met Isaac Frimpong. He’s 31 years old. He is a farmer, and after working in the trade for about a decade, he had decided himself on starting his own farm.
Michela Tindera
It took Isaac an entire year to cobble together enough money to make a deposit on the land he wanted. But then . . .
Aanu Adeoye
When he got to the land he had paid for, he realised that the illegal gold miners had taken over his land. You know, they had started mining activities.
Michela Tindera
Illegal miners completely dug out Isaac’s farm and flooded it to try to get their hands on the gold. Isaac told Aanu the land is now totally unusable.
Aanu Adeoye
And the way he told me, you know, he almost came to blows with the guys he found on the land. Then he went to meet the person who he’s rented the land from saying, what’s going on with this? You know, I paid you and I expected the land to be in pristine condition.
Michela Tindera
Now, in Isaac’s case, poachers effectively stole his land. But something else is happening too. Aanu also heard about how illegal gold miners are offering lump sum payments to farmers to, quote-unquote, borrow their farmland to search for gold.
Aanu Adeoye
They usually promise the people who own the land that when we’re done taking the gold from the land, we are going to rejuvenate it. Right. But that’s just like, it’s not possible. But if you go there, you just see, like, even if they tried their best, it just becomes like a wasteland eventually. Like, this is impossible.
Michela Tindera
So we’ve gone through how the demand for gold is affecting the cocoa industry, which already has its own problems. But when I talked with Susannah about how all this fits together, she told me that there’s another factor that complicates this picture even more.
Susannah Savage
I’ve been following the boom in cocoa prices for the last year or so, maybe a bit longer, and prices of cocoa have just gone through the roof.
Michela Tindera
Now, a quick supply-and-demand refresher. When the supply of a product like cocoa falls and demand remains steady, then the price of the product is supposed to go up. So you might think that these high prices would be good for cocoa producers, that the money would trickle down to them and keep them from selling their land to gold miners. But for Ghanaian farmers, there’s something standing in the way. And that’s this Ghanaian government agency called Cocobod.
Susannah Savage
So in order to shield cocoa farmers from the volatility of global markets, when prices can, you know, they can go really low, the Ghanaian government set up a body called Cocobod, which tries to set the price for farmers to avoid them experiencing those real lows. And it’s not so transparent how it sets that price. So it can often seem very disjointed from market prices, which are much, much higher.
So in the last year or so, you’ve seen farmers being paid around a third of what the market value of cocoa is because you have this body setting the price. So even when cocoa futures are trading at $10,000, $12,000 a tonne, cocoa farmers in Ghana aren’t getting more than $3,000.
Michela Tindera
OK. Got it. So what farmers are making isn’t lining up with market prices. So where’s the disconnect coming from?
Susannah Savage
Yeah, there’s a real lack of transparency about this, but Cocobod ostensibly provides services like spraying pesticides on plantations, providing fertilisers, things such as this. Farmers I’ve spoken to in the past have said that often these services don’t materialise, and so they’re not quite sure where the money is going, but they’re getting paid a lot less than what they see is the market price for cocoa. So they’re not able to reinvest in their plantations And they’re not able to increase their wages. You know, they’re still earning very little. And it’s really hard to make a living. So then when someone comes and offers you a lump sum to be able to mine your land for gold, that’s very attractive.
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Michela Tindera
All right. Let’s recap here. Higher gold prices are making the illegal gold mining trade in Ghana even more appealing. As more people turn to gold, that’s leading to the destruction of cocoa farmland, which is in turn hurting the Ghanaian cocoa sector even more. Now, there’s a lot of factors playing into all these. And these problems, in the short term at least, seem to only be getting worse. Farmers are making less money. More and more land is being dug up for gold. Ghana might have to start importing water. So I wanted to ask Susanna and Aanu if they’ve seen any possible ways to break this chain as they’ve been reporting on all these.
So you mentioned that the Cocobod is a government-controlled body in Ghana. So what can Ghana do to maybe bring some more stability to the cocoa industry?
Susannah Savage
There’s a lot of calls in the cocoa industry for there to be a complete overhaul of how this system works, in order for market prices to filter through to farmers more directly and more quickly. So that would mean that this price-setting mechanism that Cocobod has would have to completely change. Some people also call for them to just revert to a free market model. And it remains to be seen how Cocobod is going to react to this.
Michela Tindera
OK. So changing the way prices are set certainly sounds like that could have an impact on the cocoa farmers. Now Aanu, what do you think? I mean, it seems to me like doing something about all of the illegal gold mining that’s happening might help save what’s left of the cocoa farmland. Do you know if there’s anything being done on that end?
Aanu Adeoye
Yeah, that’s a good question. You know, Ghana’s new president, he has come into office promising to clamp down on illegal gold mining. I asked his office many times for what the plan is. They did not come back with any answers. The Ghanaian press have also been trying to, you know, pin them down on what the plan is. They haven’t come out with any plan that we’re aware of. We’re all asking the government questions, you know, what are you going to do about this? Because it’s essential to get a handle on this, right? Because not only is illegal gold mining terrible for farming, as we said, it’s terrible for water bodies in Ghana. There’s also the fact that it’s terrible for the government because the government doesn’t get the cuts from the taxes, these illegal gold miners are not paying any royalties to the government when they mine the gold. You know, companies with licenses have to pay taxes to the government. And so it means that the government is also missing out on this bonanza as gold prices reach record highs, because the people who are taking a slice of the gold are not paying any taxes to the government.
Michela Tindera
So what happens if they don’t get a handle on this? If the president doesn’t get a plan together?
Aanu Adeoye
If Ghana doesn’t get a handle on the situation, it’s going to affect their standing as one of the world’s biggest cocoa producers. And if for another two, three, four or five years they can’t grow enough cocoa, they will lose their place in the world. You know, to countries who are eager to get a bite of the sweet, sweet cocoa money. Right?
Susannah Savage
Yeah. And for example, the amount of cocoa being produced in Ecuador and Brazil and Colombia is increasing. And if Ghana doesn’t make changes, the question is will it be able to keep up or will it lose its spot as the second-biggest cocoa producer in the world?
Michela Tindera
I mean, I wonder, you know, investors making decisions maybe in the United States, in the UK, wherever, they’re seeing geopolitical tensions. And as we mentioned, like Trump’s tariff threats, and they’re just sort of thinking, OK, how can I protect my investments? I’m gonna invest in gold. I’m gonna buy gold. And how this trickles out to people living in Ghana. I’m curious, just what do you think this tells us about how investment decisions in one part of the world can impact another? How do you think about that?
Aanu Adeoye
Yeah, I mean, there’s always been this tension about extractive industries, right? You take something from the ground in Nigeria or in Ghana or in South Africa or whatever. You know, you ferry it out elsewhere, you add value on top of it. And you can sell it for multiples of what it cost to take it out of the ground. Right? There’s always been this tension. And I think what this shows us is that a lot of these systems are untenable. I don’t think it’s a new idea to say that at their worst cases can be very capricious. They can be very terrible for people in those communities. But I think it also shows us kind of this, the way the world is interconnected. So, you know, a president signs an executive order somewhere threatening to impose tariffs on their neighbours. And the price of gold rises somewhere in a village in Ghana. Obviously, since the news that, you know, the price of gold is going up, they want to be a part of this gold rush. And so, you know, I think for me the takeaway lesson is how interconnected the world is. You know, these things never happen in a vacuum.
Susannah Savage
And all of this has real-life consequences, right? You know, when cocoa prices go through the roof, that has an impact all through that supply chain. And it’s the same with gold. When investors make a big decision to move a lot of money from stocks and shares into gold, that also has a real-life impact, it pushes up that price and that changes incentives on the ground in places like Ghana.
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Michela Tindera
Behind the Money is hosted by me, Michela Tindera. It’s produced by me, Saffeya Ahmed and Katya Kumkova. Sound design and mixing by Sam Giovinco and Joseph Salcedo. Original music is by Hannis Brown. Topher Forhecz is our executive producer. Cheryl Brumley is the global head of audio. Thanks for listening. See you next week.
