The Ghana Cocoa Board (COCOBOD) has issued a critical directive to Licensed Buying Companies (LBCs) regarding cocoa bean transactions, effectively restricting their ability to purchase cocoa from farmers on credit. This action, spearheaded by Chief Executive Officer Dr. Randy Abbey, comes as a direct response to concerns about liquidity within the cocoa supply chain and a growing risk of financial instability for some LBCs. COCOBOD, in a statement released on [Date – Placeholder], outlined the directive as a strategic move to improve the efficiency of cocoa purchasing and ensure farmers receive timely payment for their produce. Dr. Abbey emphasized the importance of facilitating the shorter turnaround time for LBCs, a crucial step in accelerating cocoa processing and reducing debt burdens for these businesses. He explained that delays in securing financing have been a significant hurdle, forcing some LBCs to incur substantial debts to financial institutions. ‘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,’ Dr. Abbey stated. The directive is a significant shift from previous warnings, which COCOBOD had initially advised farmers not to hand over their cocoa beans without payment. Dr. Abbey clarified that the board is not revoking licenses over previous breaches but explicitly warned that companies that disregard the directive in future would face sanctions. He further asserted that if it happens again, the license will be revoked because it is against the terms of the license. The board is also urging farmers to reject arrangements requiring them to hand over their cocoa without immediate payment. ‘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,’ he added. The new financing arrangement, intended to bolster cocoa procurement and related activities throughout the 2026/27 crop season, is projected to provide sufficient funding for cocoa purchases and associated operations, contributing to a reduction in delays in payments to LBCs. The reforms are also expected to support local cocoa processing and value addition, improving domestic processors’ access to cocoa beans and enhancing the overall value chain. Dr. Abbey highlighted that the changes are part of a broader framework under the Ghana Cocoa Board Bill 2026, which guarantees farmers 70% of the gross Free on Board (FOB) value and allows producer prices to be reviewed during the season based on market conditions. ‘These measures and the new bill constitute the most significant reforms to our industry since 1984,’ Dr. Abbey asserted. ‘These reforms are resetting the cocoa sector for growth and industrialisation.’ The directive also underscores the board’s commitment to strengthening the industry’s resilience through targeted reforms aimed at reducing reliance on bank financing and enhancing operational efficiency.” “The new model is expected to provide sufficient liquidity for cocoa purchases and related operations all year round,” he stated. “The new funding model is to ensure sufficient liquidity for cocoa purchases and related operations all year round,” he said.”]” ,
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Source: Adom Online
