Why Ghana's Cocoa Sector is facing a financial storm.

It sounds like a paradox: Global cocoa prices hit record highs in 2024, peaking at over $12,000 per ton. Yet, instead of celebrating a windfall, Ghana’s COCOBOD (Cocoa Board) is grappling with a historic financial crisis, nursing a debt of over 30 billion cedis.

How does a country lose money when its primary export is selling at its highest price in history?

In a revealing interview, Dr. Ransford Abbey, the new CEO of COCOBOD, exposed the intricate "double whammy" of debt, operational mismanagement, and the controversial "rollover" contracts that have brought the industry to its knees,

Here is a breakdown of the crisis and the proposed path forward.

Anatomy of Ghana's Cocoa Sector Financial Crisis

1. The Math Behind the Loss: Buying High, Selling Low

The core of the crisis lies in a massive discrepancy between current market prices and old contractual obligations. Dr. Abbey explained that the previous administration locked in forward sales for cocoa at $2,600 per ton. However, they failed to supply the cocoa when it was due.

When the new management took over, they had to fulfill these old contracts using the new harvest. But because global prices had soared, they had to pay farmers significantly more to secure the beans.

• The First Blow: COCOBOD paid farmers $3,100 per ton to service contracts that only paid COCOBOD $2,600. This created an immediate debt of $500 for every ton sold,

• The Second Blow: As the farmer's price was raised to approximately $5,260 (58,000 cedis) to curb smuggling and match the market, the loss on those old 2,600 contracts deepened to nearly 2,400 per ton.

Dr. Abbey described this as a "double whammy": the inability to benefit from high global prices while simultaneously incurring massive debt on every bag shipped.

2. The 333,767-Ton "Rollover" Scandal

The catalyst for this financial bleeding was a "rollover" of 333,767 tons of cocoa. This represents cocoa that was sold forward in the previous season but never supplied.

While Dr. Isaac Opoku, Ranking Member on the Cocoa Affairs Committee, argued that rollovers are "standard industrial practice" due to weather or smuggling, Dr. Abbey pushed back. He insisted that while small rollovers occur, a rollover of this magnitude over 300,000 tons during a price surge is unprecedented in the company's 79-year history.

Unlike previous years where rollovers might have been profitable if prices rose slightly, this specific rollover forced Ghana to sell its beans at a fraction of their 2024 value.

3. Financial Decay: Debt and Negative Equity

The financial snapshot of COCOBOD revealed in the interview is stark:

• Total Debt: The new management inherited a debt of 32.9 billion cedis.

• Negative Equity: In 2016, COCOBOD had a positive equity of 1.8 billion cedis. By the end of 2024, this had plummeted to a negative equity of 3.8 to 3.9 billion cedis.

• Cocoa Roads Exposure: Beyond the direct debt, there is a 26 billion cedi exposure related to contracts awarded for the construction of "cocoa roads," diverting limited resources away from the core business of cocoa.

4. Wasteful Procurement: The Jute Sack Controversy

The crisis wasn't just about bad market timing; it was also operational. Dr. Abbey highlighted a baffling case involving jute sacks (used to bag cocoa).

Despite having over 150,000 bales of jute sacks sitting uncleared at the port for three years, the previous administration ordered 80,000 more bales in 2024. This unnecessary procurement cost the board $48 million, further draining liquidity.

5. The Collapse of the Syndicated Loan

For decades, Ghana relied on an annual syndicated loan from international banks to fund crop purchases. In the 2024/2025 season, this model collapsed. The banks simply did not respond to the request for proposals, largely due to the 333,000-ton default and the restructuring of cocoa bills.

This forced COCOBOD into a precarious "buyer-funded model," where buyers advance 60% of the cash. Dr. Abbey warns this model is unsustainable as it allows buyers to dictate terms and dries up liquidity for indigenous Licensed Buying Companies (LBCs).

The Way Forward: Domestic Funding and Value Addition

Despite the gloom, there is a proposed roadmap for recovery. Dr. Abbey revealed plans to pivot to a domestic funding model starting in the 2026/2027 season.

The goal is to stop pledging raw beans to foreign banks to secure loans. By raising funds locally, Ghana hopes to free up its cocoa supply for local processing. The country currently has a functional processing capacity of 400,000 tons enough to process more than half the crop locally which would allow Ghana to capture more value and reduce exposure to global price volatility.

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This article is based on interviews and reports regarding the 2024/2025 Ghana Cocoa Sector Crisis on Channel One TV's Point of View program hosted by Bernard Avle