The Licensed Cocoa Buyers Association of Ghana (LICOBAG) has called on the government to urgently secure emergency financing to pay for an estimated 300,000 tonnes of cocoa between now and September, warning that failure to act could trigger the collapse of the country’s cocoa industry.
Speaking at a media briefing in Accra on Thursday, LICOBAG Executive Secretary Victus Dzah said funds for cocoa purchases must be ring-fenced and used solely for that purpose. He proposed reviewing the current funding model to a hybrid system that combines elements of the old syndicated loan arrangement with real-time payments for cocoa delivered to the port by Licensed Buying Companies (LBCs).
In response, Ghana Cocoa Board (COCOBOD) acknowledged the severe liquidity challenges that have delayed payments to cocoa farmers and outlined plans to permanently abandon the decades-old syndicated loan system. At a press conference on Friday, Randy Abbey, Chief Executive of COCOBOD, assured that the board was working with the Ministry of Finance to find an urgent solution.
Dzah stressed the need for the government to make a prompt determination on the current farmgate price of cocoa to allay concerns across the value chain. He called for stronger communication between LICOBAG and COCOBOD and urged Cocoa Marketing Companies (CMCs), COCOBOD, and traders to adopt a more proactive sales strategy.
The crisis has its roots in the 2023/2024 season when COCOBOD struggled to secure the traditional syndicated facility. Instead of the usual annual syndication of over $1.3 billion, only $500 million was raised six months after the season began on September 8, 2023. LBCs were forced to pre-finance purchases at high interest rates, leaving many in debt and causing several companies to collapse.
During the 2024/2025 season, COCOBOD was unable to raise any syndicated facility, prompting the adoption of a 60/40 funding model. Under this arrangement, clients pre-financed 60 percent of crop purchases through the Bank of Ghana, with the remaining 40 percent paid upon delivery. However, many LBCs were left stranded due to lack of funding or off-takers.
The 2025/2026 season introduced an 80/20 model, with 80 percent of upfront payments going to LBCs for farmer payments and handling costs, and 20 percent to COCOBOD on delivery of stocks. Dzah noted that many clients stopped buying as early as November, citing unpaid deliveries and the high cost of Ghanaian cocoa.
Abbey attributed the crisis to collapsed international financing, falling global cocoa prices, and legacy debt, leaving thousands of farmers unpaid and unable to sell their produce. COCOBOD has sold over 530,000 tonnes of the current crop, but about 50,000 tonnes remain unsold, and some delivered beans are yet to be paid for.
Abbey said a new, sustainable funding model, originally slated for the 2026/2027 season, is being accelerated. The model will avoid tying raw cocoa beans as collateral, preserving opportunities for local processing and value addition.
