Cocobod's Overhaul: New Funding Model for Cocoa Purchases

Cocobod, Ghana's cocoa marketing board, plans to introduce a new funding model requiring traders to deposit 60% of forward contract values upfront, replacing the longstanding syndicated loan system. The revised strategy aims to cut interest costs significantly and ensure timely payments to farmers. The 2024/25 season launches on Sept. 1.

Ghana's cocoa marketing board, Cocobod, is set to introduce a new funding model for cocoa bean purchases. This revision will mandate global traders to deposit 60% of their forward contract values at the season's start, according to insiders.

This fresh approach will replace a three-decade old syndicated loan from international banks, a strategy Cocobod has relied upon since 1992. By discontinuing the high-interest loan system, the board expects to save over $150 million in interest payments. The new model will involve traders collaborating with licensed cocoa buying companies (LBCs) for smoother transactions.

Cocobod remains undecided on whether the pre-financing will involve interest or discounts on the supplied beans. Key industry figures believe that if implemented correctly, this model could resolve payment delays and reduce dependency on bank loans for cocoa buyers. The 2024/25 season will commence on Sept. 1 with a lowered production target of 650,000 tonnes.

(With inputs from agencies.)