50% of Ghana’s cocoa to be processed locally under new reform plan
The government has announced far-reaching reforms to overhaul Ghana’s cocoa sector following what it describes as eight years of “gross mismanagement”, with immediate payments to farmers, a new financing model and a forensic investigation into the operations of the Ghana Cocoa Board (COCOBOD).
Addressing a press conference in Accra today (February 12, 2025), after a crunch Cabinet meeting on Wednesday, the Finance Minister, Dr Cassiel Ato Forson, said a detailed review of the sector had exposed deep-rooted financial and structural weaknesses that required urgent intervention.
“A careful review of the cocoa sector over the last eight years revealed gross mismanagement which requires immediate and comprehensive reforms to address the challenges in the sector. Cabinet has therefore decided on the following reforms to guarantee a fair price to the cocoa farmer, secure the financial viability of the cocoa sector and ensure the long-term sustainability of the cocoa industry,” he said.
As part of immediate relief measures, Cabinet has directed COCOBOD to settle all outstanding payments owed to cocoa farmers.
“To bring relief to unpaid cocoa farmers, cabinet has accordingly directed the Ghana Cocoa Board to commence immediate repayment of all affected cocoa farmers,” Dr Forson stated. He added separately, “Cabinet directs Cocobod to commence immediate payment of all affected farmers.”
A key plank of the reform agenda is a new Cocoa Board Bill to be presented to Parliament. The proposed legislation will introduce an automatic producer price adjustment mechanism linked to movements in world market prices, exchange rates and other key variables, while guaranteeing farmers a minimum share of the export price.
“Two, a new cocoa board bill will be presented to parliament to implement an automatic adjustment of producer price to align with movement in the world market price, exchange rate and other key variables and guarantees a minimum of 70 per cent of gross FOB price to be paid to the cocoa farmer,” the Finance Minister explained.
For the remainder of the 2025/26 crop season, the Producer Price Review Committee has set a new producer price of GH¢41,392 per tonne and GH¢2,587 per bag, representing 90 per cent of the achieved gross free-on-board price, despite declining global prices.
Dr Forson also announced a fundamental shift in how cocoa purchases will be financed. The long-standing syndicated loan arrangement, which had operated for more than three decades, has been abandoned after failing in recent seasons.
“A new financing model for cocoa purchases and related operations with associated benefit for increased processing will be introduced effective 2026-2027 crop season. The current financing model was invented as a necessity after the syndicated loan failed after 32 years of successful implementation and it was proven not to be sustainable,” he said.
“In fact, it has proven not to be sustainable. The financing model is entirely dependent on a buyer’s willingness to bear the financing cost and to pre-finance the purchase of cocoa. The key motivation for buyers in the previous season was the rollover contract priced at a rate of $2,661 per metric tonne when the existing market price were above $8,000 per metric tonne.
“Once the gap between the rollover contract and the market price closes and the majority of the rollover contracts are serviced, the buyer will not be willing to pre-finance the purchase of cocoa crop. Alternatively, the previous syndicated loan model requires that Cocoa Board sells forward most of the raw beans to lock in the contract which repays the loan and serves as collateral as well. This system did not allow Cocoa Board to optimise prices on the market.”
Under the new arrangement, domestic cocoa bonds will be issued to fund purchases, with proceeds used to establish a revolving fund to repay investors within the crop year. “A new Financing module will utilise domestic cocoa bonds to purchase cocoa and repay proceeds,” he said.
The reforms also seek to accelerate value addition within Ghana. From the 2026/27 crop year, at least half of all cocoa beans produced in the country will be processed locally.
The Finance Minister announced that 50 per cent of cocoa beans produced in Ghana will be processed domestically from the 2026/2027 crop year, a move aimed at boosting industrialisation and job creation.
To support this shift, the Produce Buying Company will be revived. “PBC will be revived to resume full operations to become the leading license buying company with immediate effect,” he said. The state-owned Cocoa Processing Company is also expected to play a central role in expanding domestic processing capacity.
In addition, the government plans to clean up COCOBOD’s balance sheet by restructuring legacy debts. It will seek parliamentary approval to convert about GH¢5.8 billion owed to the Ministry of Finance and the Bank of Ghana into equity, while road-related liabilities of GH¢4.35 billion will be transferred to the Ministry of Roads and Highways.
Perhaps most significantly, the Cabinet has ordered a criminal investigation into COCOBOD’s activities over the past eight years.
“Cabinet also directed the Attorney-General to commission a concurrent forensic audit and criminal investigation of COCOBOD activities over the past 8 years,” Dr Forson disclosed.
The reforms, the Minister said, are designed to restore confidence in the cocoa sector, protect farmers’ incomes and reposition the industry for long-term sustainability. For thousands of cocoa farmers awaiting payment and clarity, the coming months will test whether the sweeping policy reset delivers the stability and fairness now being promised.