Licensed cocoa buyers in Ghana are facing a severe funding shortage that is preventing them from purchasing beans from farmers, even after the government reduced the fixed producer price for cocoa earlier this month, according to sources within the buying firms who spoke to Reuters.
The government lowered the fixed farmgate price by nearly 30%, setting it at 41,392 cedis ($3,797) per metric ton.
Despite this reduction, the price remains higher than global market levels of around $3,200, leaving international traders with little motivation to buy.
This pricing gap had already contributed to a backlog of at least 50,000 tons of unsold cocoa beans accumulating at ports before the market regulator, Ghana Cocoa Board, intervened with the price cut.
Three sources from licensed buying companies, including one from the state-owned Produce Buying Company, told Reuters that buyers currently lack the liquidity needed to purchase cocoa.
They explained that recent funds disbursed by Cocobod have been directed toward settling outstanding debts tied to previously delivered beans rather than financing new purchases.
Cocobod has stated that it released 4.2 billion cedis ($385.32 million) to licensed buying companies to clear arrears owed to farmers dating back to November. However, both farmers and purchasing clerks report that these funds have not yet reached them.
“It has been four months now and some of us have still not received payment for cocoa we delivered,” said Ebenezer Asiful, a 54-year-old cocoa farmer. “We don’t know why the government has decided to treat farmers this way.”
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Another farmer, Joseph Prenya, told Reuters that many purchasing clerks employed by licensed buyers are no longer accepting additional cocoa beans due to the lack of available cash.
“What we do now is move from one town to another to find out which purchasing clerk is open and has cash before we bring our beans,” Prenya said.
With farmgate prices still exceeding global market levels, opposition lawmakers have cautioned that Cocobod may be forced to implement another price reduction, a move that farmers say they would resist.
Jerome Sam, Head of Public Affairs at Cocobod, told Reuters that although some buyers are struggling with liquidity, others are still operating.
He maintained that the producer price would not be reduced again this season, regardless of movements in global markets.
At a recent briefing, Cocobod’s chief executive acknowledged that the organization is dealing with rising debt levels.
A cocoa trade executive at a global agricultural commodities firm also told Reuters that the regulator is contending with both unpaid obligations and new financial pressures that will continue to build as long as the farmgate price remains above global prices.
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Image Credit: Reuters
