COCOBOD Warns LBCs Against Credit Cocoa Purchases, Threatens Licence Revocation

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

COCOBOD Chief Executive Officer, Dr Randy Abbey, said the directive is aimed at improving liquidity within the cocoa purchasing system and ensuring that farmers receive timely payment for their produce.

According to him, COCOBOD has formally communicated the directive to all LBCs and has also advised farmers not to hand over their cocoa beans without receiving payment.

Dr Abbey explained that financing challenges have affected the operations of some LBCs, leaving several companies heavily indebted to financial institutions and slowing down cocoa purchases.

“The arrangement is to aid the shorter turnaround time for LBCs so that it can quicken the pace of purchases, eliminate indebtedness to banks and improve the efficiency and profitability of cocoa purchases,” he said.

Speaking at the launch of the Chamber of Cocoa Marketers, Dr Abbey clarified that COCOBOD was not withdrawing any licences over previous breaches but warned that future violations would attract sanctions.

“We are not withdrawing anybody’s license. But we have written to the effect that if it happens again, your license will be revoked because it is against the terms of your license,” he said.

He further urged cocoa farmers to reject any arrangement that requires them to surrender their produce without immediate payment.

“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 added.

The directive comes ahead of the introduction of a new financing arrangement for cocoa purchases under the 2026/27 crop season.

Dr Abbey said the new financing model is expected to provide adequate funding for cocoa procurement and related activities throughout the year, helping to reduce payment delays to LBCs.

“The new funding model is to ensure sufficient liquidity for cocoa purchases and related operations all year round,” he said.

He added that the reforms would enable LBCs to access funds more quickly, reduce their reliance on bank financing and improve the efficiency and profitability of cocoa marketing.

The reforms are also expected to support local cocoa processing and value addition by improving domestic processors’ access to cocoa beans.

Dr Abbey said the changes form part of broader reforms under the Ghana Cocoa Board Bill 2026, which guarantees farmers 70% of the gross Free on Board (FOB) value and provides for producer prices to be reviewed during the season in response to market conditions.

“These measures and the new bill constitute the most significant reforms to our industry since 1984,” he said.

“These reforms are resetting the cocoa sector for growth and industrialisation.”

By: Paulina Armah/ Radio1.