Cocoa purchases in Ghana slumped in December due to election-related payment delays from the state marketing board and squeezed exporter financing, farmers and buyers, told Reuters.
They were of the view that the delays could fuel smuggling.
Cocoa prices have hit record highs over the past year because of poor crops in the world’s two biggest producers, Ivory Coast and Ghana.
While West Africa has seen some rebound this 2024/25 crop season, markets still expect potential supply disruptions.
Cocobod switched from a three-decade-old marketing model to a new system this season where global traders and buyers are largely responsible for financing and bringing in much of the cocoa crop.
They are then reimbursed when Cocobod pays for the beans.
However, sources at licensed cocoa buyers (LBCs) said the Dec. 7 elections, which was won by opposition candidate and former president, John Dramani Mahama, had disrupted the new system due to uncertainty surrounding the outcome and the potential for poll-related unrest.
Mahama has pledged to reform the country’s cocoa sector.
One LBC management executive told Reuters that his company had throttled back financing for purchases and also said payments from Cocobod had been delayed during the election period and banks had also been hesitant to release funding.
Sources interviewed for this story asked not to be named as they were not authorised to speak publicly on the matter.
Cocobod denied that the election or transition period impacted its payments.
“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 non-payment or pay delays,” Fiifi Boafo, Cocobod’s head of public affairs, explained.
Ghana does not publish cocoa purchase data. However, another source from a major buyer said his firm’s purchases were down about 20 per cent in December compared to the previous month, adding that the election was a factor but the company had also exhausted the financing it had raised.
The payment delays and funding crunch are being felt hardest in remote rural areas, said a district officer for a leading LBC, who said he had been sourcing cocoa from farmers with promises of future payment.
“It’s been two weeks since my purchasing clerks credited about 2,000 bags of cocoa beans to me, but I still don’t have the money to pay,” he said, explaining he was awaiting financing from his head office.
Ghanaian cocoa production has rebounded from last season’s disastrous harvest, but some farmers are now struggling to sell their produce.
One farmer, who asked not to be named due to concerns over potential retribution from buyers and Cocobod, disclosed that he couldn’t find a buyer for his 12 bags of beans, adding: “It made the Christmas sour.”
With beans piling up on plantations and a growing discrepancy between Ghana’s official farmgate price and much higher global spot prices, buyers told Reuters that a spike in illegal smuggling of beans out of Ghana was likely inevitable.
The country lost more than a third of last season’s output to smuggling, most of it via neighbouring Togo, where sales are unregulated. Reuters
