Some cocoa farmers in Ghana have not received payment, putting investment in the next harvest at risk, as international traders refuse to pay the upfront sums required under a new government purchasing model, sources said.
The revamped system, introduced for the 2024/25 season, shifted the responsibility for pre-financing cocoa purchases from the Ghana Cocoa Board (COCOBOD) to international traders.
Despite better-than-expected production this season, traders’ unwillingness to pay deposits of at least 60 percent of the value of forward contracts at the start of the season has left Ghana, the world’s second-largest cocoa producer, with a large stockpile, three sources familiar with the situation said.
They could not provide a precise figure for the stockpile. COCOBOD did not respond to requests for comment, as seen on Reuters.
Global cocoa prices have fallen by about 20 percent so far this year, following a 50 percent drop last year, after having surged 160 percent in 2024.
Under Ghana’s cocoa financing system, farmers sell beans to licensed buying companies (LBCs), which then sell them to COCOBOD. COCOBOD sells to international traders through its marketing company.
A source at a licensed buying company said that the drop in international prices has made it difficult for COCOBOD to persuade traders to make advance payments to secure supplies.
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A second source at an LBC said the farmgate price set annually by the regulator was too high.
In October, Ghana set its farmgate price at 58,000 Ghana cedis ($4,640) per metric ton, an increase of 12 percent, while international prices are trading around $4,700 per ton.
The system, which had been in place for three decades, previously allowed COCOBOD to raise funds via syndicated loans and distribute them to licensed buying companies, which then bought beans from farmers for onward sale to international markets.
The system was revised after COCOBOD struggled to raise financing, but sources said the new model is also under strain.
A third source from an LBC said Ghanaian cocoa is overpriced compared with the international market, making it unviable to buy from farms at a price that results in a loss on resale.
Speaking on Saturday, Stevenson Anane Boateng, president of the Ghana National Association of Cocoa Farmers, told a local radio station that farmers had not been paid since November. It is unclear how many farmers remain unpaid.
Theophilus Tamakloe, vice president of the Ghana Cooperative Cocoa Farmers Association, told Reuters that the payment delays threaten farmers’ ability to service bank loans and carry out essential maintenance in January, including pruning and applying fertiliser.
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Image Credit: Bloomberg.com
