Up to $1.5 billion in loans are expected to be obtained by Ghana’s cocoa industry to cover the cost of buying cocoa for the 2024–2025 growing season. The Cocoa Board (COCOBOD) sources state that this action is a part of an attempt to lessen the effects of the much lower cocoa output that was recorded this year.
Traditionally, the second-largest cocoa producer in the world (behind Ivory Coast) funds its annual purchases from local farmers through a syndicated loan arrangement. This funding is essential because it guarantees farmers receive payment for their crops on time. Unfortunately, the finance for this year was beset by unprecedented delays and complexities because of an unanticipated decline in cocoa production, which has been about 40% lower than predicted. COCOBOD was forced to modify its financial plan midway through the season.
Previously, COCOBOD had arranged an $800 million loan for the current season but was forced to withdraw only $600 million of it, cancelling the remainder due to insufficient cocoa to back the full amount. “Given the shortfall this season, we’ve sent a request for proposal to banks to secure up to $1.5 billion for the next season. We’re currently working with them to determine the most suitable loan amount,” a COCOBOD source explained. The final figures are still being decided as banks assess the situation.
The loan preparation for the upcoming season shows that COCOBOD is taking the initiative to stabilize the industry in the face of persistent difficulties. At least one foreign bank has already traveled to Ghana to inspect the cocoa fields, demonstrating the strong interest from other institutions. Next month, a bank visit is scheduled to assess the issue in more detail before making a final offer.
COCOBOD sources anticipate producing 810,000 metric tons of cocoa this coming season, indicating that production levels will rebound. This expected rise is a result of both better weather and the restoration of cocoa estates that were previously destroyed by the swollen shoot virus, which between 2018 and 2024 destroyed almost 590,000 hectares of agriculture.
The impact of adverse weather, disease, and cocoa smuggling has been profound. Notably, the smuggling of cocoa beans, driven by a global increase in cocoa prices, has led to significant losses. In the 2022/23 season alone, COCOBOD estimated a loss of around 150,000 tons due to smuggling activities and illegal gold mining operations, locally known as galamsey. These challenges are expected to persist, posing threats to the sector’s stability.
Furthermore, according to the most recent central bank data, Ghana’s cocoa export earnings has dropped dramatically, falling by about 50% year over year in the first four months. The financial difficulties and the pressing need for strong funding channels to support the sector’s recovery are highlighted by this crisis.
