Cocoa purchases in Ghana faced a significant downturn in December 2024, as election-related uncertainties and constrained financing disrupted market operations.

The resulting delays in payments from the state marketing board, Cocobod, and the reluctance of exporters to provide financing sparked concerns about the potential for smuggling, according to a Reuters report.

This development comes at a critical time for Ghana’s cocoa industry, which, along with Ivory Coast, plays a pivotal role in the global cocoa market. Over the past year, cocoa prices have reached record highs due to subpar harvests in the two leading producers. While there were signs of recovery in the 2024/25 crop season, fears of supply disruptions remain a pressing issue.

The decline in cocoa purchases coincided with Ghana’s December 7 election, which saw former president John Dramani Mahama return to power. The election brought uncertainty to the sector, as Licensed Cocoa Buyers (LBCs) scaled back their financing activities. Concerns over potential unrest and delayed payments from Cocobod led to reduced funding, further straining the cocoa purchasing process.

An executive at an LBC explained the situation, stating, “During the election period, we reduced financing for cocoa purchases because of delayed payments from Cocobod and the banks’ reluctance to release funds.”

These financial constraints were exacerbated by Cocobod’s new financing model introduced during the 2024/25 crop season. The revised system shifted much of the responsibility for financing and transporting cocoa crops to global traders and buyers, with reimbursement occurring only after Cocobod paid for the beans. This departure from the three-decade-old system created additional challenges, as LBCs and exporters struggled to adjust.

Cocobod’s Response

Despite the widespread concerns, Cocobod denied that the election directly affected its payment processes. Fiifi Boafo, the head of public affairs at Cocobod, acknowledged occasional operational challenges but refuted claims of systemic delays.

“We agree that in some instances there are operational challenges, and sometimes the buyers pay farmers a maximum of a week later. But there’s no general issue of nonpayment or pay delays.”
Fiifi Boafo

While Cocobod sought to reassure stakeholders, the realities on the ground painted a different picture. Industry insiders reported a substantial decline in cocoa purchases in December, with one source at a major cocoa buying firm revealing that purchases were down approximately 20% compared to November.

Impact on Farmers and Buyers

Delayed payments and limited financing have caused cocoa beans to pile up on some plantations, further complicating the situation. Farmers, already grappling with the effects of high production costs and market volatility, now face additional financial pressure. Buyers, too, are struggling to maintain operations in the face of depleted resources and logistical bottlenecks.

The situation has raised fears of smuggling, as farmers may seek alternative markets to sell their beans. This poses a significant risk to Ghana’s cocoa sector, which remains a cornerstone of the country’s economy. The potential loss of revenue from smuggling could undermine efforts to stabilize the industry and ensure fair compensation for farmers.

Meanwhile, President Mahama’s administration faces an uphill battle to address the challenges in the cocoa sector. With his campaign pledges to reform the industry, there will be significant pressure to act swiftly and decisively. The cocoa industry is not only a vital economic driver but also a source of livelihood for millions of Ghanaians.

To stabilize the sector, Mahama’s government will need to address the root causes of the financing constraints and payment delays. This includes fostering stronger collaboration between Cocobod, LBCs, and financial institutions to ensure timely payments and adequate funding. Additionally, improving the transparency and efficiency of the new financing model will be essential to rebuilding confidence among stakeholders.

The disruptions in cocoa purchases highlight the vulnerability of Ghana’s economy to sector-specific challenges. Cocoa contributes significantly to export revenues and foreign exchange earnings, making it a critical component of economic stability. Prolonged disruptions could have far-reaching consequences, including reduced government revenues and heightened economic uncertainty.

As the world’s second-largest cocoa producer, Ghana also plays a crucial role in the global chocolate industry. Supply disruptions in Ghana and neighboring Ivory Coast could exacerbate the global cocoa shortage, driving prices even higher and straining international supply chains.