Despite Price Cut, Ghana Cocoa Buyers Lack Funds to Buy Beans From Farmers, Sources Say
Ghana’s licensed cocoa buyers lack the funds to buy beans from farmers despite the government’s recent move to slash the fixed price it sets for the chocolate ingredient, sources at the firms told Reuters.
The government cut the fixed farmer price by almost 30% earlier this month, but the new price of 41,392 cedis ($3,797) per metric ton remains above global prices of around $3,200, giving international traders little incentive to buy.
The pricing mismatch previously saw at least 50,000 tons of unsold beans pile up at ports before the market regulator Cocobod moved to cut the price.
Three LBC sources, including one at the state-owned Produce Buying Company, told Reuters that buyers do not have funds to purchase cocoa, with Cocobod’s recent fund disbursements going toward outstanding debts on delivered beans.
Cocobod has said it disbursed 4.2 billion cedis ($385.32 million) to LBCs to clear arrears owed to farmers since November. But farmers and purchasing clerks say the money has yet to reach them.
“It has been four months now and some of us have still not received payment for cocoa we delivered,” said Ebenezer Asiful, a 54-year-old cocoa farmer. “We don’t know why the government has decided to treat farmers this way.”
Farmer Joseph Prenya told Reuters many LBC purchasing clerks are refusing to accept more beans.
“What we do now is move from one town to another to find out which purchasing clerk is open and has cash before we bring our beans,” Prenya said.
With the farmer prices still above global prices, opposition lawmakers have warned Cocobod may be forced into another cut – a move farmers say they will resist.
Jerome Sam, Cocobod’s Head of Public Affairs, told Reuters that while some buyers lacked liquidity, others remained active. He insisted the farmer price would not be reduced again this season, regardless of global price movements.
Cocobod’s chief executive said at a recent briefing that the organisation had mounting debts.
A cocoa trade executive at a global agri-commodities trade house said the regulator is grappling with both unpaid bills and new liabilities that will keep accumulating as long as the farmer price remains higher than global prices.
A Ghanaian association that represents LBCs has previously acknowledged owing local banks around $750 million in debt taken on to pre-finance purchases. It has urged members to prioritise settling what they owe farmers before repaying banks.
