Editorial: COCOBOD’s stabilisation measures receive IMF endorsement

Government’s cocoa sector stabilisation measures have been endorsed by the International Monetary Fund, as they acknowledge that Ghana’s cocoa industry is facing pressure from weak global prices, declining domestic output and liquidity constraints at COCOBOD.

The Fund described the sector as macro-critical, noting it accounts for close to 10 percent of export revenue and supports about 800,000 farming households.

An IMF spokesperson who was contacted on the issue noted that the most urgent priority is decisive implementation of COCOBOD’s turnaround strategy, including ending quasi-fiscal activities, establishing lower-cost financing and adopting key reforms.

The endorsement comes as the Ministry of Finance announced a series of reforms following an emergency Cabinet meeting on February 11, 2026. Authorities reduced the producer price for the remainder of the 2025/26 crop season to GH¢41,392 per tonne, equivalent to GH¢2,587 per bag effective February 12.

This followed a sharp fall in world cocoa prices from an average of US$7,200 per tonne at start of the season to about US$4,100 per tonne. Price revision underscores the volatility confronting COCOBOD’s pricing framework.

Under the revised arrangement, farmers will receive 90 percent of a gross Free-On-Board price benchmarked at US$4,200 per tonne to cushion the global downturn’s impact. Government says the measure is intended to inject liquidity into the sector and expedite payments to farmers.

More importantly, government is introducing a new financing model to replace the syndicated loan structure that has been in place for more than three decades. Rather, domestic cocoa bonds will be issued to raise a revolving fund for cocoa purchases with repayment within each crop year.

Previous off-taker financing model, adopted after delays in syndication, left COCOBOD dependent on buyers’ willingness to pre-finance purchases.

COCOBOD’s own turnaround strategy outlines measures to realign producer pricing to a gross FOB benchmark, cap industry costs, phase out quasi-fiscal expenditures and strengthen ministerial oversight.

The plan targets a reduction in industry costs from 56 percent of gross FOB to 10 percent over the medium-term and aims to eliminate budget deficits from the 2024/25 financial year.

While acknowledging government’s stabilisation steps, the Fund stressed that implementation will be critical to restoring financial viability and safeguarding export revenues.

In a related development, the Institute of Economic Research and Public Policy (IERPP) has noted that recent developments in the cocoa sector could pose risks to Ghana’s economy and national security, following government’s decision to reduce the producer price of cocoa from GH?3,625 to GH?2,587.

Professor Isaac Boadi, Executive Director of IERPP, said the price reduction has been rejected by cocoa farmers – who have criticised government’s justification for the move.

IERPP believes the decision could have long-term implications for the cocoa industry and broader economy if not addressed.

The institute notes that more than one million people are directly involved in Ghana’s cocoa sector and cautioned that the lower price may discourage continued participation in cocoa farming and deter new entrants into the industry.

IERPP raised concerns that as a result of this some farmers might turn to illegal mining activities, commonly known as galamsey, or sell their lands to illegal miners if cocoa farming becomes less viable. The country faces significant environmental challenges linked to illegal mining.

The institute further believes any disruption in the sector could negatively affect Ghana’s economic stability since cocoa has been a longstanding pillar of the national economy.

Consequently, it urges government to take urgent steps in addressing tensions within the sector, including reconsidering the new producer price.

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