Concerns have been raised about the financial sustainability of government reforms in the cocoa sector, with Associate Professor of Finance at Andrews University, Williams Kwasi Peprah, warning that the approach could expand COCOBOD’s debt burden.
During an appearance on JoyNews’ The Pulse, he explained that authorities appear determined to maintain attractive producer prices for farmers despite weakening international cocoa prices and a strengthening cedi.
“As the world market is going down and noticing the strengthening of the cedi, they are trying to ensure the cocoa farmer receives a large portion of the proceeds.”
Risk of Burden Falling on COCOBOD
According to him, the key issue is not the intention of supporting farmers but the financial mechanism behind it. Without a clear funding source, the difference between global prices and local payouts will have to be absorbed somewhere.
“The only challenge is who pays for the differentials? Is it going to be the Ministry of Finance or COCOBOD?”
He cautioned that leaving COCOBOD to carry the cost alone would likely worsen its already fragile financial standing.
Possible Solution Through Debt Adjustment
Prof. Peprah suggested restructuring the institution’s liabilities to ease pressure, including converting some debts owed to the government into equity before new market arrangements begin. He added that government backing may ultimately be required if the policy leads to losses.
“Unless, probably, the Finance Ministry decides to take care of any loss that may arise.”
While the reforms are intended to boost efficiency and protect farmers’ incomes, he indicated their success will largely depend on how the financial risks are shared between COCOBOD and the state.
