Ghana’s cocoa purchases fell significantly in December due to delayed payments from the state marketing board and reduced financing for exporters. These issues, compounded by the election period, are raising concerns among farmers and buyers about increased smuggling in the sector.
Payment delays affect cocoa purchases
Cocoa prices hit record highs in 2023 due to poor harvests in the world’s two largest producers, Ivory Coast and Ghana. Despite a partial recovery in the 2024/25 crop in West Africa, the market remains vulnerable to supply disruptions.
Ghana’s marketing board, Cocobod, implemented a new system this season where global traders finance and manage a large portion of the cocoa crop, with repayments made later. However, the December 7 elections, won by John Dramani Mahama, created uncertainty that directly impacted the system, delaying payments and reducing financing.
Impacts of elections on the sector
Sources close to licensed cocoa buyers (LBCs) said the election and banks’ hesitation to release financing contributed to the delays. According to an LBC executive, Cocobod’s payments were affected during the election period, hampering buying and selling operations.
Cocobod, on the other hand, denied that the transition period had impacted payments. Fiifi Boafo, Cocobod’s head of public relations, said that occasional operational delays may occur, but there is no widespread problem.
Grain hoarding and smuggling
Hoarding of cocoa beans on plantations is becoming a growing problem. One farmer revealed that he was unable to sell 12 bags of beans, describing the situation as “sour for Christmas”. In some rural areas, buyers are being promised future payments due to lack of funds.
With global cocoa prices significantly higher than the official producer price in Ghana, experts warn of rising smuggling. Last year, more than a third of cocoa production was smuggled, mostly to Togo, where cocoa sales are unregulated.
New government promises reforms in the sector
Newly elected President John Dramani Mahama has promised to implement reforms in Ghana’s cocoa sector. Farmers and buyers hope the changes will bring more stability and improve financing in the future.
With financial challenges and political uncertainty, Ghana’s cocoa sector is facing a critical juncture. Finding solutions to reduce delays and curb smuggling will be crucial to the sustainability of the market.
Source: Maxwell Akalaare Adombila | Notícias Agrícolas
