By Magdalene Andoh
The Ghana Cocoa Board (COCOBOD) has outlined the financial and structural challenges confronting the cocoa sector, explaining the shift in financing models, delayed payments to some Licensed Buying Companies (LBCs), and pressures arising from the sharp fall in international cocoa prices.
Traditionally, Ghana relied on syndicated loans to finance cocoa purchases, ensuring steady liquidity throughout the season regardless of market conditions. However, in the 2024/25 season, Ghana was denied access to syndicated financing due to failure to honour contractual obligations in the 2023/24 season, where the country was unable to supply the agreed 800,000 metric tonnes of cocoa. The shortfall of 333,767 metric tonnes was subsequently rolled over into future contracts.
COCOBOD’s financial difficulties were further compounded by the Domestic Debt Exchange Programme (DDEP), which weakened the Board’s financial position and eroded international confidence. As a result, international banks declined to provide syndicated facilities, effectively shutting Ghana out of traditional cocoa financing structures.
In response, off-takers and international buyers adopted a new financing arrangement in which they directly funded cocoa purchases. Under this model, buyers financed the acquisition of cocoa beans on the condition that Ghana would service the rolled-over 333,767 metric tonnes at the original contract price of $2,600 per tonne, and also supply new crop cocoa under newly signed contracts. The buyers also determined which LBCs would receive funding for purchases.
The 2024/25 season operated under a 60/40 financing model, with 60% paid upfront and 40% paid upon shipment. This structure required COCOBOD to service both the rolled-over contracts and new crop obligations simultaneously. COCOBOD’s operational funding, including margins and payments to LBCs and hauliers, depended largely on the 40% tranche, constraining its liquidity.
In the 2025/26 season, management continued with this model, acknowledging it was not sustainable but necessary to stabilise COCOBOD’s financial books. To prioritise farmer welfare, the structure was adjusted to 80/20, allowing more upfront liquidity to ensure farmers were paid promptly. So far, COCOBOD has serviced over 235,000 tonnes of the rolled-over contract at an estimated $500 loss per tonne, due to the gap between the 2023/24 contract price of $2,600 and the 2024/25 farmgate price of $3,100 per tonne.
Payments to Farmers and LBCs
Addressing claims that farmers have not been paid since November, COCOBOD clarified that under the new financing model, several LBCs that received direct funding from off-takers made payments for cocoa purchased. However, LBCs without off-taker funding had to source their own funds before submitting cocoa through the Cocoa Marketing Company (CMC). While COCOBOD acknowledges outstanding obligations, it confirmed that payments have been made between November and February, contradicting claims of a complete payment freeze.
Global Price Collapse and Market Pressures
The international cocoa market has experienced a sharp downturn, with prices falling from nearly $12,000 per tonne in 2024 to about $4,000 per tonne, where they have largely stabilised. This has placed significant pressure on producing countries such as Ghana and Côte d’Ivoire. Although Côte d’Ivoire has not officially announced a price reduction, reports suggest cooperatives are selling at lower prices.
Ghana’s cocoa has become relatively expensive on the international market due to production and logistics costs, estimated at not less than $6,300 per tonne from farmgate to shipping, far above prevailing global prices. This mismatch has led buyers to delay signing new contracts, affecting both Ghana and Côte d’Ivoire. Despite these challenges, 580,000 tonnes out of the projected 650,000 tonnes for the 2025/26 season have already been bought, graded and sealed.
Cocoa Pricing in Ghana
COCOBOD stressed that cocoa prices in Ghana are not set unilaterally but by the Producer Price Review Committee, which includes representatives of farmers, the Ministry of Finance, the Bank of Ghana, transporters, LBCs, and COCOBOD. Until this committee meets and reviews prices, the current farmgate price remains in force. Government and COCOBOD, the Board said, remain committed to securing the best possible outcomes for farmers, with announcements expected in due course.
Vehicles and Operational Expenditure
Responding to public concerns about the purchase of new vehicles, COCOBOD clarified that the vehicles were procured strictly for operational purposes and were not funded from resources meant for farmers. The funding came from a residue fund, classified as internally generated funds (IGF) of the Board. The investment was justified on the grounds that nearly 70% of COCOBOD’s operational vehicle fleet is over 10 years old, affecting efficiency and service delivery.
Legacy Financial Burdens
COCOBOD also highlighted several legacy financial burdens affecting its current operations:
• Jute sack procurement, with the last exercise costing $48 million, making new procurement unnecessary.
• Cocoa roads, which cost GHS 26 billion, with GHS 21 billion incurred between the 2018/19, 2019/20 and 2020/21 seasons, despite no budgetary allocations for cocoa roads in those periods.
• A $350 million rehabilitation fund meant to restore 156,400 hectares, where only 40,000 hectares were delivered, alongside an additional GHS 700 million drawn.
• A total outstanding debt stock of GHS 32.9 billion, further constraining COCOBOD’s financial flexibility.
COCOBOD maintains that while the current financing model is not ideal, it is a transitional strategy aimed at stabilising the sector, restoring confidence, protecting farmers, and rebuilding the financial integrity of Ghana’s cocoa industry in the face of unprecedented global and domestic economic pressures.
