The Government, through the Minister for Finance, Dr. Cassiel Ato Forson, has unveiled sweeping reforms to revive the cocoa sector after an extensive review of the industry’s performance over the past eight years.
The Minister attributed the sector’s difficulties to widespread mismanagement, stressing the need for an urgent policy redirection.
Dr. Forson revealed that the Cabinet has approved measures designed to ensure fair pricing for farmers, restore the financial health of the sector, and promote long-term industrial sustainability.
As part of the immediate interventions, the Cabinet has instructed COCOBOD to begin settling all outstanding arrears owed to cocoa farmers.
To eliminate the recurring payment challenges, the Government will lay a new COCOBOD Bill before Parliament.
The proposed legislation seeks to establish an automatic price adjustment formula that links producer prices to movements in the global market prices, exchange rates, and other critical economic indicators. Importantly, the Bill will guarantee cocoa farmers at least 70 percent of the gross Free on Board (FOB) price.
The Finance Minister also outlined plans to phase out the existing financing arrangement, which replaced the 32-year syndicated loan scheme after its collapse. He explained that the current system, which depends on buyers pre-financing cocoa purchases, has become unsustainable.
According to him, the buyers were previously encouraged to pre-finance through rollover contracts priced far below the prevailing market rates. However, as the disparity between those contract prices and the global market prices narrows, the model is gradually losing its attractiveness.
The Ministry further faulted the former syndicated loan structure, arguing that it compelled COCOBOD to use the forward sales of raw beans as collateral, limiting Ghana’s ability to take advantage of favourable market prices and fully utilise the local processing capacity.
In its place, the Government will introduce a domestic cocoa bond programme. Under this arrangement, domestic bonds will be issued to generate a revolving fund for COCOBOD within each crop season, with the repayment made directly from the cocoa proceeds.
The reform agenda also seeks to revitalise the indigenous licensed buying companies that were marginalised under the previous financing framework.
Notably, the state-owned Produce Buying Company will undergo a restructuring to restore full operations and regain its status as the leading Licensed Buying Company in the sector.
At the heart of the overhaul is a renewed focus on value addition and employment generation.
By separating the cocoa sales from the collateral-backed loan obligations, COCOBOD will gain the flexibility to supply beans of varying quantities to the local processing firms.
As an initial step, the Cabinet has directed that the remaining beans for the 2025/26 crop season be dedicated entirely to domestic processing.
