Accra: The Ghana Cocoa Board (COCOBOD) has issued a strong warning to Licensed Buying Companies (LBCs) against purchasing cocoa beans from farmers on credit, emphasizing that companies persisting with this practice risk having their operating licenses revoked. This directive, announced by COCOBOD Chief Executive Officer, Dr. Randy Abbey, is part of a broader strategy aimed at improving liquidity in the cocoa purchasing system, facilitating faster payments to farmers, and addressing long-standing financing challenges within the sector.
According to Ghana Web, Dr. Abbey, speaking at the launch of the Chamber of Cocoa Marketers, stated that COCOBOD had formally notified all LBCs that purchasing cocoa without immediate payment to farmers is a violation of their operating licenses. 'We are not withdrawing anybody's licence. But we have written to the effect that if it happens again, your licence will be revoked because it is against the terms of your licence,' he said. This warning comes ahead of COCOBOD's implementation of a new financing framework for the 2026/27 crop season, which is expected to transform cocoa purchase funding.
Dr. Abbey also highlighted that the responsibility for enforcing this directive does not rest solely with buying companies. He urged cocoa farmers to reject any arrangements that involve handing over their produce without receiving payment, as such practices undermine efforts to enhance efficiency across the cocoa value chain. '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 insisted.
The practice of purchasing cocoa on credit has become increasingly common due to the financial constraints faced by many LBCs. Delayed reimbursements and limited access to working capital have made it challenging for several companies to maintain smooth purchasing operations, leading some to rely on informal credit arrangements with farmers.
According to Dr. Abbey, the new funding arrangement set to take effect in the upcoming crop year is designed to ensure that sufficient funds are available throughout the season to support cocoa purchases and related activities. One of the key objectives of the reforms is to eliminate payment delays that have affected licensed buyers since 2020. 'The new funding model is to ensure sufficient liquidity for cocoa purchases and related operations all year round,' he said. 'Hence, beginning the 2026/27 crop year, we hope to eliminate the delays in the payment of cocoa-taking-over receipts, which have been the bane of LBCs since 2020.'
Industry analysts believe that improving liquidity could significantly reduce the financial burden on buying companies, many of which have accumulated substantial debts to commercial banks. COCOBOD expects the reforms to shorten the turnaround time for cocoa purchases, enhance operational efficiency, and strengthen the financial sustainability of cocoa marketing.
These latest measures are part of wider reforms contained in the proposed Ghana Cocoa Board Bill 2026, which seeks to restructure the cocoa industry and bolster support for farmers. Dr. Abbey explained that the legislation guarantees cocoa farmers 70 percent of the gross Free On Board (FOB) value of their produce while allowing producer prices to be reviewed during the crop season in response to changing market conditions. He argued that the reforms represent a significant turning point for Ghana's cocoa sector. 'These measures and the new bill constitute the most significant reforms to our industry since 1984,' he said. 'These reforms are resetting the cocoa sector for growth and industrialisation.'
Beyond improving cocoa purchases, COCOBOD believes the reforms will also bolster local processing by ensuring that domestic processors have better access to cocoa beans. With financing challenges, declining production, and disease outbreaks continuing to impact the industry, the success of the new measures is expected to play a critical role in determining the performance of Ghana's cocoa sector during the 2026/27 season.