Cocoa Credit Deals Put LBCs Licenses At Risk

The Ghana Cocoa Board (COCOBOD) has prohibited Licensed Buying Companies (LBCs) from purchasing cocoa beans from farmers on credit, warning that repeat offenders could have their licences revoked. The directive forms part of wider reforms aimed at improving liquidity, strengthening payment discipline and increasing efficiency across Ghana’s cocoa supply chain. The Chief Executive Officer of COCOBOD, Dr Randy Abbey, announced the move at the launch of the Chamber of Cocoa Marketers, saying the regulator had formally communicated the decision to all LBCs.

He said the practice of buying cocoa on credit was contrary to the terms under which the companies were licensed and must cease. According to Dr Abbey, LBCs have been given clear notice that any further breach of the directive could result in the withdrawal of their licences. “We have met as part of our stakeholder engagements. I have told them you are not supposed to buy cocoa on credit from farmers. We have all decided that we will go and sin no more.” He stressed that COCOBOD was not immediately withdrawing the licence of any company but had issued a formal warning on the consequences of future violations. “We have written to the effect that if it happens again, your licence will be revoked because it is against the terms of your licence.”

Dr Abbey said farmers had also been informed not to hand over their cocoa beans to purchasing clerks on credit. “We have also told the farmers that LBCs are not supposed to buy cocoa on credit from you. So don’t go and take your cocoa to any purchasing clerk on credit,” he said. The ban comes as COCOBOD prepares to introduce a new financing model for cocoa purchases from the 2026/27 crop year. Dr Abbey said the proposed system would provide sufficient liquidity to support cocoa purchases and related operations throughout the year while addressing persistent delays in payments to LBCs.

He said delays in the payment of cocoa takeover receipts had remained a major challenge for LBCs since 2020, affecting their ability to promptly finance fresh purchases from farmers. “The new funding model is to ensure sufficient liquidity for cocoa purchases and related operations all year round,” Dr Abbey said, adding that COCOBOD hoped to eliminate delays in payments to LBCs beginning with the 2026/27 crop year. He explained that faster payment cycles would shorten the turnaround time for buying companies, enabling them to purchase cocoa more quickly, reduce their indebtedness to banks and other financial institutions and improve their profitability.

The reforms are also expected to support efforts to expand domestic cocoa processing and increase value addition within Ghana. Dr Abbey said the previous financing arrangement often required a significant portion of Ghana’s cocoa crop to be collateralized to secure funding, a situation that limited the availability of raw cocoa beans for local processing. Under the proposed financing mechanism, COCOBOD intends to provide the liquidity needed for cocoa procurement while creating greater room for domestic processors to access beans and contribute to the country’s industrialization agenda.

The changes form part of broader reforms under the new Ghana Cocoa Board Bill, 2026, which, according to Dr Abbey, provides a framework to guarantee cocoa farmers 70 per cent of the gross Free on Board (FOB) value of cocoa. The proposed reforms would also allow producer prices to be adjusted during the crop season in response to market indicators, potentially giving farmers greater flexibility in benefiting from favourable developments in the cocoa market. Dr Abbey described the planned changes as a major turning point for Ghana’s cocoa industry, saying they were intended to improve the financial viability of the sector, strengthen the entire value chain and secure more sustainable returns for farmers and other stakeholders. “These measures and the new bill constitute the most significant reforms to our industry since 1984,” he said.

He noted that the existing COCOBOD legislation dated back to 1984 and said the new reforms were intended to reposition the cocoa sector for growth, greater efficiency and industrialisation. “These reforms are resetting the cocoa sector for growth and industrialisation,” Dr Abbey emphasized.

By: Joyce Owusu