Ghana's cocoa crisis deepens as buyers owe banks $750 Million

Economic Impact on Ghana's Cocoa Sector

Ghana's licensed cocoa buyers are currently facing significant financial challenges, with debts to banks amounting to $650-750 million, according to the Licensed Cocoa Buyers Association. These difficulties are exacerbated by delayed payments from the regulator Cocobod and a decline in global cocoa prices.

The President of the Association, Samuel Adimado, reported that licensed buyers owe between 7-8 billion cedis ($650-750 million) to banks and an additional $205-234 million to farmers, with accruing interest. Despite delivering 580,000 tonnes of cocoa beans this season, buyers have not yet received full payment, and an additional 70,000 tonnes remain undelivered in the fields.

The current financial strain on the cocoa sector is attributed to two consecutive poor harvests due to disease and adverse weather, alongside a significant drop in global prices from $12,000 per tonne in 2024 to approximately $4,000. Additionally, funds were reportedly diverted by Cocobod to non-core activities, which compelled buyers to seek loans to pay farmers.

In an attempt to address the crisis, Finance Minister Cassiel Ato Forson announced a reduction in the farmgate price by nearly 30 percent to $3,580 per tonne, which aligns with international market rates, to provide "immediate liquidity." The government plans to seek parliamentary approval to extend debt repayment terms for Cocobod and to reform financing strategies within local debt markets. This reform aims to ensure that farmers receive at least 70 percent of export prices. The cocoa industry is critical to the livelihood of one million people in Ghana.

Based on reporting by Africanews.