Ghana’s Cocoa Authority Reconsiders Funding Strategy Amid Farmer Payment Delays
Accra, January 28 — Ghana’s cocoa regulator, Ghana Cocoa Board, is reviewing its long-standing financing approach after payment delays left many cocoa farmers unpaid, raising concerns over investment in the next harvest.
For decades, the regulator relied on large syndicated loans from international banks to finance cocoa purchases at the start of each season. These loans provided upfront cash to pay farmers, with repayment coming later from export revenues. However, rising borrowing costs and changing global market conditions have forced a rethink.
During the 2023/24 season, Ghana paid more than $150 million in interest on its syndicated facility, placing strain on the regulator’s balance sheet. Weak global demand and falling cocoa prices over the past two years have also reduced traders’ willingness to make advance payments, leading to unsold stocks accumulating inside the country.
As a result, some farmers have yet to receive payment for delivered cocoa, a situation officials warn could discourage spending on fertiliser and farm maintenance ahead of the next crop cycle.
COCOBOD suspended its annual pre-export syndicated loan for the 2024/25 season, marking the first time since the early 1990s that the mechanism was not used. According to officials, the move reflects concerns over liquidity, debt sustainability, and the growing influence of large international buyers who now provide much of the market’s upfront financing.
Without access to early-season capital, smaller licensed buying companies have become increasingly dependent on major cocoa traders, reducing competition and limiting flexibility in the domestic market.
Despite the drawbacks, officials acknowledge that syndicated loans can still work under the right conditions. If cocoa prices and export volumes are strong enough, proceeds can comfortably cover principal and interest. However, when margins tighten, the structure leaves little room for error.
COCOBOD says it is working closely with Ghana Ministry of Finance to identify alternative funding solutions that ensure farmers are paid promptly without exposing the sector to excessive borrowing costs.
Senior officials stress that delayed payments are not something the country can afford to accept as normal, given farmers’ central role in the cocoa value chain.
“Our priority is to protect farmers and secure long-term sustainability for the sector,” one official said, adding that any new financing model must balance affordability, liquidity, and market stability.
Ghana is the world’s second-largest cocoa producer, and how it resolves the current funding challenge will have implications not only for domestic farmers, but also for global cocoa supply in the seasons ahead.
