Debt conversion, price cuts and processing mandate mark cocoa sector overhaul   

By Joshua Worlasi AMLANU

Government will convert billions of cedis in debt, cut cocoa producer prices and mandate local processing for at least half its beans as part of a broad sector overhaul, Finance Minister Cassiel Ato Baah Forson said on Thursday.

The measures come after a sharp drop in global cocoa prices, a failed financing model and what government describes as years of mismanagement at Ghana Cocoa Board.

The Producer Price Review Committee reduced the farmgate price to GH¢41,392 per tonne from GH¢58,000, effective Feb. 12, after world prices fell to about US$4,100 per tonne from an average of US$7,200. The new rate also translates to GH¢2,587 per bag.

Dr. Forson said the earlier price increase had been necessary to prevent smuggling after Cote d’Ivoire raised its producer price by about 20 percent in October 2025. Exchange-rate movements at the time widened the gap between these two countries and risked diverting Ghanaian beans across the border.

“We had to act quickly to protect our farmers and prevent smuggling,” Dr. Forson said. “But from October 2025, the world market price of cocoa started dropping. While prices were declining, Cocobod continued to sell until the price fell below the cost from farm gate to market. The current situation is largely driven by the unwillingness of buyers to purchase Ghana’s cocoa because it has become uncompetitive and very expensive.”

He said the committee decided to pay farmers 90 percent of the achieved gross free-on-board price of US$4,200 per tonne for the remainder of the 2025-2026 season to cushion them against the downturn.

The price adjustment follows deep financial strains at Cocobod. Ghana projected output of 800,000 tonnes for the 2023-2024 season and committed 786,672 tonnes in forward contracts. Actual production came in at 432,145 tonnes – a deviation of more than 45 percent, far above the historical forecast variance of 5 percent to 15 percent.

This shortfall led to the rollover of about 333,767 tonnes of contracts at an average price of US$2,661 per tonne, resulting in losses exceeding US$1billion according to the minister. He said the losses reduced resources that would otherwise have gone to farmers and other stakeholders.

Cocobod’s long-standing syndicated loan model also faltered. For the first time in three decades, the annual syndicated loan in 2023 was delayed, with the first tranche arriving four months after the season began. The board later defaulted on part of its obligations and relied on emergency support from the Finance Ministry.

“The financing model invented after the syndicated loan failed was entirely dependent on buyers pre-financing cocoa purchases,” Dr. Forson said. “The key motivation for buyers was the rollover contract price of US$2,661 per metric tonne when the market price was around US$2,000. Once that gap closed, the incentive disappeared. That model was not sustainable.”

To address the situation, government will introduce a new financing framework based on domestic cocoa bonds from the 2026-2027 season. The bonds will create a revolving fund to finance purchases within each crop year, reducing reliance on external syndicated loans and buyer pre-financing.

Cabinet has also directed the Finance Ministry to seek parliamentary approval for converting about GH¢5.8billion in legacy debt owed by Cocobod to the Ministry of Finance and Bank of Ghana. The board owes GH¢3.7billion linked to past transactions and an additional GH¢1.3billion under a 10-year facility.

The debt conversion is expected to restore positive equity and strengthen the board’s balance sheet. In addition, road-related liabilities of GH¢4.35billion will be transferred to the Ministry of Finance and Ministry of Roads and Highways.

Between 2014 and 2024, Cocobod awarded contracts totalling GH¢26.5billion, with   GH¢21.5billion issued between 2018 and 2021. Under an IMF-supported programme in 2023, commitments were to be reduced from GH¢21.7billion to GH¢6.9billion, but the exercise was not completed at the time. The exposure has now been cut to GH¢4.35billion, the minister said.

“Road construction accounts for a significant part of the financial difficulties Cocobod is facing,” Dr. Forson said. “The new Cocoa Bill will prohibit quasi-fiscal expenditures and impose sanctions where necessary.”

Government has also secured a US$500million facility announced in the 2026 budget to fund agricultural roads, including cocoa roads – shifting that responsibility away from Cocobod.

Beyond financing and debt restructuring, the reforms include a push to increase domestic processing. Cabinet has directed that the remainder of the 2025-2026 crop be allocated for local processing and from 2026-2027 at least 50 percent of Ghana’s cocoa beans must be processed locally.

State-owned Produce Buying Company will be revived and the Cocoa Processing Company will be prioritised to lead domestic processing. Dr. Forson said private processors have indicated they have the capacity to handle more than half of Ghana’s output.

To strengthen oversight, Cabinet has instructed the Attorney General to commission a forensic audit and criminal investigation into Cocobod’s activities over the past eight years.

“These reforms are to guarantee a fair price for the cocoa farmer, secure the sector’s financial viabilitya and ensure long-term sustainability,” Dr. Forson said. “We will restore discipline, strengthen the balance sheet and protect the interests of Ghanaian farmers.”

Cocoa remains one of the country’s main export earners. Government’s overhaul signals a shift toward tighter fiscal control, domestic financing and value addition as the sector navigates lower global prices and reduced buyer appetite.

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