The Ghana Cocoa Board (COCOBOD) has issued a stern warning to Licensed Buying Companies (LBCs), stating it will revoke operating licences for those purchasing cocoa beans from farmers on credit. This decisive action aims to improve liquidity within the cocoa purchasing system and ensure farmers receive prompt payment for their produce.
COCOBOD Chief Executive Officer, Dr. Randy Abbey, confirmed this directive. He explained that delays in financing have hampered LBCs' ability to purchase cocoa efficiently. This situation has left some companies heavily indebted to financial institutions, creating instability in the supply chain. The new policy seeks to address these long-standing issues directly.
This move is part of broader reforms within Ghana's vital cocoa sector. It seeks to eliminate payment delays that have plagued LBCs since 2020. The regulator has also advised farmers not to hand over cocoa beans without receiving immediate payment. This directive comes ahead of a new financing arrangement for cocoa purchases, set to begin with the 2026/27 crop year. This model promises adequate funding for cocoa procurement and related activities throughout the year.
Dr. Randy Abbey, speaking at the launch of the Chamber of Cocoa Marketers, clarified COCOBOD's position. He stated, “We are not withdrawing anybody’s license. But we have written to the effect that if it happens again, your license will be revoked because it is against the terms of your license.” He further urged farmers to comply by refusing to sell their cocoa on credit, reinforcing the regulator's commitment to farmer welfare.
The implications of this directive are significant for Ghana's economy. Improved payment speed will enable LBCs to purchase cocoa more quickly, reducing their exposure to bank debt. This will also enhance the profitability of cocoa marketing. Furthermore, these financing reforms are expected to support efforts to expand local cocoa processing and value addition. This will provide domestic processors with better access to cocoa beans, boosting industrialisation.
These measures are integral to the Ghana Cocoa Board Bill 2026, which guarantees farmers 70% of the gross Free On Board (FOB) value. The bill also allows for producer prices to be reviewed during the season based on market developments. Dr. Abbey described these reforms as the most significant changes to the industry since 1984. He emphasized that these actions are resetting the cocoa sector for sustained growth and industrialisation. The market will closely watch LBC compliance and the effectiveness of the new financing model.