The government is overhauling its cocoa financing and pricing model after a production shortfall and contract rollover triggered losses of more than US$1 billion, Finance Minister Cassiel Ato Baah Forson said on Thursday.
The reforms follow a turbulent 2023-2024 season in which Ghana Cocoa Board projected output of 800,000 tonnes but harvested 432,145 tonnes, a deviation of more than 45%. The shortfall led to a rollover of 333,767 tonnes at an average price of $2,661 per tonne, far below prevailing market levels, resulting in losses exceeding US$1 billion.
The minister said the situation was worsened by a sharp drop in global prices and a financing model introduced after the annual syndicated loan failed in 2023. For the first time in three decades, the loan was delayed, with the first tranche arriving four months into the season. COCOBOD later defaulted on parts of its obligations, including facilities owed to the Ministry of Finance.
Under the buyer-financing model adopted after the syndicated loan faltered, international traders pre-financed cocoa purchases. The minister said the arrangement proved unsustainable once price gaps narrowed and rollover contracts were serviced.
“The current financing model was invented as a necessity after the syndicated loan failed after 32 years of successful implementation and it was proven not to be sustainable,” Ato Forson said. “It is entirely dependent on a buyer’s willingness to pre-finance purchases. Once that incentive disappears, the model collapses.”
Ghana will now introduce domestic cocoa bonds from the 2026-2027 season to create a revolving fund to purchase beans within each crop year. The new framework is also expected to revive indigenous licensed buying companies and restore the state-owned Produce Buying Company as a leading market participant.
Cabinet has directed that at least 50% of cocoa beans be processed locally from 2026-2027, with the remainder of the current season’s beans allocated to domestic processors. The state-owned Cocoa Processing Company will also be revived.
The government will seek parliamentary approval to convert about GH¢5.8 billion in legacy debt owed to the Ministry of Finance and the Bank of Ghana into longer-term instruments to restore COCOBOD’s balance sheet. Road liabilities of GH¢4.35 billion will be transferred to the Finance and Roads ministries to reduce quasi-fiscal pressures.
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