Cabinet directs COCOBOD to pay farmers
Cabinet has introduced sweeping 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.
To bring relief to unpaid cocoa farmers, Cabinet has accordingly directed the Ghana Cocoa Board to commence immediate payment to all affected cocoa farmers.
Moreover, 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 to guarantee a minimum of 70 per cent of gross FOB price to be paid to the cocoa farmer.
"A new financing model for cocoa purchases and related operations with associated benefit for increased processing will be introduced effective the 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.
In fact, it has proven not to be market price,” he said.
This means, a tonne of cocoa beans will now sell for GH¢41,392 and GH¢2,587 per bag of 64 kilogrammes (kg), down from GH¢3,625 that persisted for the better part of the 2025/2026 season which started in August last year.
The Finance Minister explained that the development was because the world market price of the cash crop which earns the country an average of 15 per cent of foreign exchange and about nine per cent of its Gross Domestic Product (GDP), had plummeted significantly from the average of $7,200 to $4,100 per tonne, making Ghana's cocoa beans uncompetitive and creating liquidity challenges.
The measure, he added, had become necessary to reflect the reality of the world market price of cocoa, ensure the injection of immediate liquidity for expedited payment of farmers and guarantee the sustainability of our cocoa sector.
The measures follow an emergency Cabinet meeting held last Wednesday to address issues affecting the cocoa sector.
Pay farmers
To bring relief to unpaid cocoa farmers, Cabinet directed the Ghana Cocoa Board (COCOBOD) to commence immediate payment to all affected cocoa farmers.
Dr Forson said a new COCOBOD Bill would 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 to guarantee a minimum of 70 per cent of gross FOB price to be paid to the cocoa farmer.
"A new financing model for cocoa purchases and related operations with associated benefit for increased processing will be introduced effective the 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.
In fact, it has proven not to be sustainable," the Minister of Finance said.
New model
The financing model, Dr Forson explained, was entirely dependent on a buyer's willingness to bear the financing costs and to pre-finance the purchase of cocoa.
Again, he said, the key motivation for buyers in the previous season was the rollover contract price at a rate of $2,661 per tonne, when the existing market price was above $8,000 per tonne.
Dr Forson said once the gap between the rollover contract and the market price closed and the majority of the rollover contracts were serviced, the buyer would not be willing to pre-finance the purchase of cocoa.
"Alternatively, the previous syndicated loan model requires that COCOBOD 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 COCOBOD to optimise prices on the market. In addition, the use of raw beans contract as collateral for the loan meant that
Ghana could not optimise its installed capacity for processing," he said.
The new financing model, Dr Forson said, would utilise proceeds from domestic cocoa bonds to purchase cocoa, and repay the cocoa proceeds within each crop year.
He said the bonds would be used to raise a revolving fund for COCOBOD to turn around, at least, once during the season.
"The model will also revive the indigenous licensed buying companies that have been completely thrown out of business as a result of the current financing model," he emphasised.
In addition, Dr Forson said the state-owned Produce Buying Company (PBC) would be revived to resume full operation and become the leading licensed buying company in the cocoa sector with immediate effect.
With the new financing model, Dr Forson said COCOBOD could sell beans of any volume to local processing companies to promote value addition and job creation.
He said Cabinet had, however, directed that with immediate effect, the remainder of the beans for the crop year 2025-2026 should be used in domestic processing.
"Cabinet has also directed that beginning from the 2026/2027 crop season, a minimum of 50 per cent of all cocoa beans should be processed locally, and this will be part of the COCOBOD Bill going to Parliament.
Dr Forson said together with the Minister of Trade, Agribusiness and Industry, Elizabeth Ofosu-Adjare, they had met with domestic cocoa processors across the private sector who had indicated that they had the capacity and the willingness to process more than 50 per cent of Ghana's cocoa beans going forward.
He said an agreement had been reached on the immediate implementation of the policy.
Indebtedness
In order to address the indebtedness inherited by the current management of Ghana Cocoa Board, Dr Forson said Cabinet had further directed him to urgently seek parliamentary approval to convert the legacy debt of about GH¢5.8 billion to the Ministry of Finance and the Bank of Ghana.
COCOBOD, the Finance Minister said, currently owed the Ministry of Finance GH¢3.7 billion, which arose from the conversion of non-marketable cocoa bills into a loan, and the Bank of Ghana another 10-year loan of GH¢1.38 billion.
The debt conversion, he said, would restore positive equity and boost the international and local market to support the operations of the Ghana Cocoa Board.
"This will strengthen the balance sheet, obviously, of Ghana Cocoa Board, to enable it to implement its new financing model and the reforms," he said.
Dr Forson also relayed Cabinet’s directive for the transfer of cocoa road liabilities worth GH¢4.35 billion to the Ministry of Roads and Highways and the Ministry of Finance, with immediate effect.
