Current financial year proving challenging for COCOBOD – IMF

The International Monetary Fund (IMF) has highlighted ongoing financial challenges for Ghana Cocoa Board (COCOBOD) in the 2023/24 financial year, despite an improved financial position in 2023.

In its assessment, the IMF noted that weak cocoa production during the 2023/24 season significantly affected COCOBOD’s ability to meet forward sales contracts. This situation prevented Ghana from fully capitalizing on record-high international cocoa prices, as some forward contracts with lower pricing had to be rolled over to the 2024/25 season.

To address concerns over smuggling and illegal gold mining on cocoa farmland, the farmgate price for the 2024/25 season was increased by 50%, aligning with high global prices.

COCOBOD has also implemented a new financing model to enhance bean purchases. This approach combines self-financing by licensed buying companies with local bank financing, replacing the traditional reliance on syndicated loans from international banks.

The IMF expressed cautious optimism regarding COCOBOD’s cash flow, anticipating a broadly balanced position for the current season, assuming a rebound in production driven by normalized weather conditions—a forecast supported by recent climate data.

In October 2024, the government introduced a turnaround strategy for COCOBOD to restore financial sustainability. Key measures include:

• Strengthening financial oversight.
• Ensuring producer prices reflect 60-70% of international market prices, balancing farmer benefits with operational costs.
• Rationalizing expenditure and gradually phasing out quasi-fiscal programs, such as cocoa road projects and fertilizer distribution.

Additionally, the Cocoa Desk within the Ministry of Finance continues to monitor COCOBOD’s financial status to enhance oversight and ensure accountability.

This comprehensive strategy aims to stabilize COCOBOD’s operations and secure its long-term financial health amidst industry challenges.