The head of corporate communication for COCOBOD, Jerome Kwaku Sam, has provided detailed explanations on the financial and operational challenges facing the cocoa sector, particularly the difficulties encountered in cocoa financing, syndicated loans, and farmer payments following the minority’s press conference on unpaid farmers.
According to Jerome, there are two main sources of funding for cocoa purchases: cocoa syndicated loans and the organisation’s own private funding arrangements. In 2024, Ghana was unable to secure cocoa syndicated loans due to challenges linked to 2023 regulatory requirements and financial sector clean-up issues, which affected COCOBOD’s financial records.
Officials explained that syndicated loans normally allow cocoa producers to receive advance payments based on agreed cocoa quantities to be delivered within a specific period. This system enables government to release funds to buyers ahead of the production season and also provides price stability for cocoa, shielding the sector from fluctuations on the world market.
However, COCOBOD was unable to fully meet its contractual cocoa supply obligations, leading to financial difficulties ahead of the 2024 season. As a result, international financiers imposed strict conditions, including requiring COCOBOD to replace cocoa quantities that could not be supplied in 2023. These financiers also declined to pay the new 2024 price, insisting instead on the 2023 market price.
In 2023, cocoa was marketed at about $2,600 per tonne, while the 2024 farmgate price was later announced at $3,000 per tonne. The price difference contributed to an estimated loss of $117 million. COCOBOD also recorded a further $940 million revenue loss that could have benefited both farmers and government.
Additionally, he disclosed that losses of about $48 million were incurred by the then government on cocoa sacks that were not required.
Due to the inability to fulfil free agreement obligations, COCOBOD could not secure syndicated loans for 2024. Consequently, some buyers were allowed to independently source funds to purchase cocoa directly from farmers, while some chosen buyers received monies from the financeers to purchase from the farmers.
The Board further clarified that delays in payments to some cocoa farmers were caused by Licensed Buying Companies (LBCs) struggling to secure international loan facilities, forcing them to look for alternative sources of financing before settling payments.
It was also revealed that COCOBOD is incurring losses of about $500 per tonne, which COCOBOD attributes to inefficiencies under the previous government administration, now in the minority.
On debt management, Jerome stated that COCOBOD Chief Executive, Dr. Randy Abbey, is not evading the organisation’s debt obligations but is instead adopting a strategic approach by paying the debt in tranches.
As part of mitigation measures to ease the burden on farmers, COCOBOD announced initiatives rolled and support packages including free distribution of seedlings, spraying services, fertilisers, agrochemicals, and scholarships. These interventions are aimed at cushioning farmers while efforts continue to clear outstanding balances.
COCOBOD reaffirmed its commitment to restoring confidence in Ghana’s cocoa sector and ensuring sustainable financing for future cocoa seasons, Jerome concluded.
