A sweeping overhaul of Ghana’s cocoa industry is underway as the Ghana Cocoa Board (COCOBOD) moves to eliminate credit transactions between Licensed Buying Companies (LBCs) and local farmers.
The strategy behind the ban is to streamline payment cycles, decrease corporate debt owed to financial institutions, and boost overall liquidity across the supply chain. While previous offenses will not result in immediate license cancellations, COCOBOD has strictly warned that future violations will lead to the prompt loss of operating permits.
Furthermore, farmers have been instructed to withhold their cocoa beans from any purchasing clerks unwilling to pay immediately upon delivery.
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“The arrangement is to aid the shorter turnaround time for LBCs so that it can quicken the pace of purchases, eliminate indebtedness to banks and improve the efficiency and profitability of cocoa purchases. We have met as part of our stakeholder engagements, I have told them you are not supposed to buy cocoa on credit from farmers. We have all decided that we will go and sin no more.”
“So 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 against the terms of your license. We have also told the farmers that LBCs are not supposed to buy cocoa on credit from you. So don’t go and take your cocoa to any purchasing clerk on credit,” Dr. Randy Abbey said.
This enforcement coincides with the introduction of a revamped purchasing mechanism set to roll out for the 2026/27 crop year. Under the traditional financial structure, a large portion of the cocoa yield was tied up as loan collateral, which frequently restricted domestic processors from accessing raw beans and slowed down payments. The upcoming framework promises year-round liquidity, removing long-standing operational bottlenecks and enabling local processing facilities to secure the raw materials necessary for domestic value creation.
“The new funding model is to ensure sufficient liquidity for cocoa purchases and related operations all year round. Hence beginning the 26/27 crop year, we hope to eliminate the delays in the payment of cocoa taking over receipts which has been the bane of LBC since 2020,” he remarked.
These operational shifts are anchored in the Ghana Cocoa Board Bill 2026, a legislative update designed to modernize industry regulations. Under the proposed statutory changes, growers are guaranteed a minimum of 70% of the gross Free on Board (FOB) value, alongside flexible price adjustments throughout the season to reflect global market swings.
“These measures and the new bill constitute the most significant reforms to our industry since 1984. So the COCOBOD Act until Parliament passed this new one was a 1984 Act. These reforms are resetting the cocoa sector for growth and industrialisation,” he stressed.
By integrating credit restrictions with a structural overhaul of crop financing, COCOBOD aims to stabilize the cocoa market, safeguard farmer revenues, and build a foundation for long-term industrial growth.
