The Licensed Cocoa Buyers Association of Ghana (LICOBAG) has called on the government to urgently secure a facility to pay for an estimated 300,000 tonnes of cocoa in a phased manner between now and September, warning that failure to act could deepen the current crisis confronting the sector.
At a media briefing in Accra last Thursday, the Executive Secretary of LICOBAG, Victus Dzah, said funds for cocoa purchases must be ring-fenced and used solely for that purpose.
He suggested reviewing the current funding model to a hybrid system, combining elements of the old syndicated loan system with real-time payments for cocoa delivered to the port by Licensed Buying Companies (LBCs).
“We suggest a review of the current funding model to a hybrid of the old model of securing some syndication facility, be it local or international, to enable real time payment for cocoa purchased and delivered to the port by Licensed Buying Companies,” he said.
In response, Ghana Cocoa Board (COCOBOD) acknowledged the severe liquidity challenges that have delayed payments to cocoa farmers and outlined plans to permanently abandon the decades-old syndicated loan system.
“We are fully aware of the issues and we take very seriously the concerns raised by farmers and other stakeholders,” said Randy Abbey, Chief Executive of COCOBOD, at a press conference on Friday. He assured that COCOBOD was working with the Ministry of Finance to find an urgent solution.
At the briefing, Dzah stressed the need for the government to make a prompt determination on the current farmgate price of cocoa to allay concerns across the value chain. He also called for stronger communication between LICOBAG and COCOBOD and urged Cocoa Marketing Companies (CMCs), COCOBOD, and traders to adopt a more proactive sales strategy.
Dzah emphasized that COCOBOD should increase oversight of the trading room, develop the professional capacity of CMCs and traders, and restore a credible succession plan to improve staff morale and professionalism. He further recommended that COCOBOD divest itself of non-core activities, outsourcing them to the private sector.
Warning of a potential collapse, Dzah said the core problems affecting the cocoa sector included inadequate funding for COCOBOD, CMCs, and traders, lack of commitment to revamp the industry, and excessive political interference.
Since the 2023/2024 season, LICOBAG said, COCOBOD has struggled to secure the traditional syndicated facility. Instead of the usual annual syndication of over $1.3 billion, only $500 million was raised six months after the season began on 8 September 2023. LBCs had to pre-finance purchases at high interest rates, leaving many in debt and causing several companies to collapse.
During the 2024/2025 season, COCOBOD was unable to raise any syndicated facility, prompting the adoption of a 60/40 funding model. Under this arrangement, clients pre-finance 60 percent of crop purchases through the Bank of Ghana, with the remaining 40 percent paid upon delivery. However, many LBCs were left stranded due to lack of funding or off-takers.
The 2025/2026 season introduced an 80/20 model, with 80 percent of upfront payments going to LBCs for farmer payments and handling costs, and 20 percent to COCOBOD on delivery of stocks. Dzah noted that many clients stopped buying as early as November, citing unpaid deliveries and the high cost of Ghanaian cocoa, while delayed payments forced some cocoa into smuggling.
At the COCOBOD press conference, Abbey attributed the crisis to collapsed international financing, falling global cocoa prices, and legacy debt, leaving thousands of farmers unpaid and unable to sell their produce. He traced the crisis to 2022, when COCOBOD struggled with syndicated loans, leading to the collapse of the 32-year-old system for the 2024/2025 season.
Abbey said COCOBOD had relied on $70 million bridge financing from the Ministry of Finance in 2023/2024 after syndicated loans arrived late, but the temporary buyer-financing model faltered when global prices fell from over $6,400 per tonne to nearly $4,000. Buyers delayed purchases, and COCOBOD committed to a higher farmgate price, worsening the liquidity crisis.
COCOBOD has sold over 530,000 tonnes of the current crop, but about 50,000 tonnes remain unsold, and some delivered beans are yet to be paid for. Abbey said a new, sustainable funding model, originally slated for the 2026/2027 season, is being accelerated. The model will avoid tying raw cocoa beans as collateral, preserving opportunities for local processing and value addition.
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