Ghana’s cocoa purchases smooth under new funding model, Cocobod CEO says
By Maxwell Akalaare Adombila
ACCRA, Nov 4 (Reuters) -Cocoa purchases in the world's number two producer Ghana have been smooth and orderly in the 2024/25 crop season under a new funding model that requires global traders to pay upfront for part of bean shipments, the head of the sector regulator Cocobod said on Monday.
Starting in September, Cocobod replaced a previous three-decade-old system where the regulator financed bean purchases from farmers with an annual syndicated loan from international banks.
The old system meant that any delays in loan disbursements would ripple through the entire sector, leaving growers starved of funds and encouraging bean smuggling.
Cocobod CEO Joseph Aidoo told media that beyond savings in interest, the new model had eliminated delayed payments to licensed cocoa buyers (LBCs), ended the borrowing of beans from farmers and improved buyers' turnaround time and profits.
Under the syndication, Ghana was using between 50-80% of a season’s output as collateral for the loans and disbursement delays were creating a debt cycle in the cocoa sector, Aidoo said.
He said the current model was more flexible, requiring licensed buyers to use their own funds or money sourced from their partner traders to purchase cocoa from farms for Cocobod to deliver to global buyers.
"When the LBC delivers the cocoa to us, we alert the trader and start shipment processes. Once we prepare the bill of lading, the trader pays for the consignment, and we disburse that money to the LBC to start purchasing again. It’s good for everyone," Aidoo said.
While the departure from the old, familiar system raised concerns it could cause initial disruptions, Aidoo said there have been no complaints from farmers about delays in payments for their cocoa.
Poor harvests and increased smuggling in 2023/24 caused Ghana to miss on delivery of beans, giving trading houses losses of at least $1 billion on cocoa derivatives.
This season, Ghana sees output recovering to 650,000 metric tons. Rebuilding of disease-infested farms, increased pruning and hand pollination should help sustain its cocoa sector, Aidoo said.
Reporting and writing by Maxwell Akalaare Adombila; additional reporting by Christian Akorlie; Editing by Anait Miridzhanian and Tomasz Janowski
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