Ghana Announces Cocoa Sector Reforms to Ensure Financial Stability and Fair Farmer Pricing

The Ministry of Finance has announced a series of major reforms aimed at strengthening the cocoa sector, ensuring fair producer prices, and securing long-term sustainability for one of Ghana’s most important export industries. The measures were approved by Cabinet under the government of the Republic of Ghana.

Immediate Relief for Farmers

As part of the reforms, Cabinet has directed the COCOBOD to immediately settle outstanding payments owed to cocoa farmers. The move is intended to provide financial relief to affected farmers while restoring confidence in the cocoa purchasing system.

Planned Legislative Changes

Government plans to present a new cocoa sector bill to the Parliament of Ghana. The proposed law will introduce an automatic adjustment mechanism for cocoa producer prices.

This mechanism will align farmer payments with movements in global cocoa prices, exchange rates, and other relevant economic factors, while guaranteeing farmers at least 70% of the gross Free On Board (FOB) price.

New Financing Model for Cocoa Purchases

A central element of the reform is the introduction of a new financing model for cocoa purchases and related operations:

• The existing financing approach, introduced after the collapse of the syndicated loan system, has proven unsustainable and overly dependent on buyers’ willingness to prefinance cocoa purchases.
• Previous rollover contracts priced far below prevailing global cocoa prices reduced buyer incentives to continue prefinancing once market price gaps narrowed.
• Earlier syndicated loan arrangements required forward selling of cocoa beans as collateral, limiting price optimisation and constraining local processing capacity.

Under the new system:

• Domestic cocoa bonds will be issued to finance purchases, with repayment made from cocoa proceeds within each crop season.
• The bond structure will create a revolving fund to support continuous cocoa purchasing throughout the year.
• Indigenous Licensed Buying Companies are expected to be revitalised, improving local participation in the sector.
• The state-owned Produce Buying Company will be revived to operate fully and serve as a leading licensed buyer.

Boost for Local Processing and Jobs

Officials say the reforms will allow COCOBOD greater flexibility to sell cocoa beans to local processing firms, promoting value addition, industrial growth, and employment opportunities within Ghana.

Outlook

Government believes the reforms will stabilise financing in the cocoa sector, improve farmer livelihoods, encourage domestic processing, and ensure the long-term sustainability of Ghana’s cocoa industry.