The Ghana Cocoa Board (COCOBOD) has directed Licensed Buying Companies (LBCs) to stop purchasing cocoa beans from farmers on credit, warning that companies that violate the directive could have their operating licences revoked.
Chief Executive Officer of COCOBOD, Dr Randy Abbey, disclosed this at the launch of the Chamber of Cocoa Marketers, where he said the directive forms part of measures to improve liquidity, payment discipline and efficiency within the cocoa supply chain.
According to him, COCOBOD has formally communicated the directive to LBCs and cautioned that any repeat of the practice could result in the withdrawal of their licences.
“The arrangement is to aid the shorter turnaround time for LBCs so that it can quicken the pace of purchases, eliminate indebtedness to banks and improve the efficiency and profitability of cocoa purchases. We have met as part of our stakeholder engagements, I have told them you are not supposed to buy cocoa on credit from farmers. We have all decided that we will go and sin no more.”
Dr Abbey said COCOBOD had also cautioned farmers against handing over their cocoa to purchasing clerks without receiving payment.
“So we are not withdrawing anybody’s license. But we have written to the effect that if it happens again, your license will be revoked because against the terms of your license. We have also told the farmers that LBCs are not supposed to buy cocoa on credit from you. So don’t go and take your cocoa to any purchasing clerk on credit,” he said.
New funding model
The directive comes ahead of a major overhaul of the financing system for cocoa purchases, with COCOBOD expected to introduce a new funding model from the 2026/27 crop year.
Dr Abbey said the new arrangement is intended to provide LBCs with sufficient liquidity throughout the year and eliminate delays in payments after they take over cocoa from farmers.
“The new funding model is to ensure sufficient liquidity for cocoa purchases and related operations all year round. Hence beginning the 26/27 crop year, we hope to eliminate the delays in the payment of cocoa taking over receipts which has been the bane of LBC since 2020,” he said.
He explained that faster payment cycles would enable LBCs to increase the pace of cocoa purchases while reducing their reliance on bank financing and associated indebtedness.
The financing reforms are also expected to support Ghana’s efforts to increase domestic cocoa processing and value addition.
Dr Abbey said the previous financing structure required a significant portion of the cocoa crop to be used as collateral for financing, which constrained access to raw cocoa beans for local processors.
He said the new mechanism would instead provide the liquidity needed for cocoa procurement while helping Ghana retain a greater share of the value generated from its cocoa production.
New cocoa reforms
The reforms form part of the new Ghana Cocoa Board Bill 2026, which Dr Abbey said would guarantee cocoa farmers 70% of the gross Free on Board (FOB) value of cocoa.
Under the new framework, producer prices would also be subject to adjustments during the season based on relevant market indicators.
Dr Abbey described the measures as a major reset of Ghana’s cocoa industry, aimed at improving the financial sustainability of the sector, strengthening the cocoa value chain and delivering better returns to farmers and other industry players.
“These measures and the new bill constitute the most significant reforms to our industry since 1984. So the COCOBOD Act until Parliament passed this new one was a 1984 Act. These reforms are resetting the cocoa sector for growth and industrialisation,” he stressed.
