COCOBOD bans LBCs from buying cocoa on credit, threatens licence revocation

The Ghana Cocoa Board (COCOBOD) has directed Licensed Buying Companies (LBCs) to stop purchasing cocoa beans from farmers on credit, warning that companies that violate the directive could have their operating licences revoked.

COCOBOD Chief Executive Officer, Dr Randy Abbey, announced the directive at the launch of the Chamber of Cocoa Marketers. He said the measure forms part of efforts to improve liquidity, strengthen payment discipline and make cocoa purchasing more efficient.

Dr Abbey said COCOBOD had formally notified all LBCs that they were not permitted to buy cocoa on credit from farmers. While no licences have been withdrawn so far, he warned that any company that repeats the practice would face sanctions, including possible licence revocation.

He also advised farmers not to hand over their cocoa beans to purchasing clerks without receiving payment.

The directive comes as COCOBOD prepares to introduce a new financing model for cocoa purchases from the 2026/27 crop season. The new system is expected to provide adequate funding for cocoa procurement and related activities throughout the year while addressing delays in payments to LBCs.

According to Dr Abbey, faster payment cycles will allow LBCs to purchase cocoa more quickly, reduce their debts to financial institutions and improve the profitability of cocoa marketing.

He explained that the financing reforms would also support domestic cocoa processing and value addition. Under the previous system, large portions of the cocoa crop had to be used as collateral to secure financing, which restricted local processors’ access to raw cocoa beans.

The new mechanism, he said, is designed to ensure sufficient liquidity for cocoa purchases while helping Ghana retain more value from its cocoa production.

The reforms are part of the new Ghana Cocoa Board Bill 2026, which Dr Abbey said guarantees farmers 70% of the gross Free on Board (FOB) value of cocoa while allowing producer prices to be reviewed during the season based on market conditions.

He described the changes as some of the most significant reforms to Ghana’s cocoa industry since 1984, saying they are intended to strengthen the sector financially, improve the value chain and promote sustainable growth and industrialisation.