The costs of cash in Ghana’s cocoa supply chain

6 min readJul 28, 2021


By Mark Tsang, AgUnity Head of Data

This is a summary of a report from the Better Than Cash Alliance and World Cocoa Foundation, published in 2020 that examines the “Hidden Costs of Cash to Ghana’s Cocoa Sector”. Authors are Daniel Waldron, Marjolaine Chaintreau and Oswell Kahonde.


Chocolate! What images, sensations and yearnings did that single word conjure up in you?

The $106.6 billion global market (2020) is expected to grow to $147 billion by 2026 at a CAGR (compound annual growth rate) of 5.5%. The demand for the delicious food is led by North America and Europe with the Asia Pacific expected to be the fastest growing region as western lifestyles gain influence in China and India(1). Chocolate is a household world in many countries but much less known is the essential ingredient of cocoa that is made from the beans of the Cacao tree.

Cocoa beans are grown and harvested in a slim band, 10o north and south of the equator(2) with West African countries producing 75% of global supply. Ghana and Ivory Coast are the largest of the producing countries. Also less known is that cocoa has been used as a medicine for thousands of years in South American societies and the cocoa butter (the fat extracted from the bean) is used in cosmetic skin care products today.

Now that you’ve been acquainted with wonderful cocoa, let’s find out more about how cocoa transactions are done in Ghana which produces 25% of the world’s cocoa bean exports. At the start of the value chain, around 90% of the 800,000 cocoa farmers grow on less than 5 hectares and 1 in 4 live on $3.10 per day. They harvest during two seasons, October — March (the main season) and June- September (light season). Farmers sell their harvest to purchasing clerks (PCs) who are often part of the farming communities and work as agents of the Licensed Buying Companies (LBCs). There at 57 LBCs in Ghana but only 9 account for nearly 90% of the cocoa market in the country. The LBCs purchase the farmers’ cocoa through PCs then aggregate and transport the beans to the COCOBOD which is a government controlled entity that regulates the cocoa industry. COCOBOD sets the price paid to farmers and the LBC margins. It receives all Ghanaian cocoa and on-sells it to domestic and international markets(3).

In terms of the money cycle it starts with the LBCs which have to borrow funds to purchase the cocoa. They either borrow from the COCOBOD at 7–10% pa interest or from domestic banks at 18–30%. The funds are then transferred to district offices that write cheques or distribute cash in person to the local PCs who transact directly with farmers. District offices will distribute on average $20,000 per week and up to $100,000 per week at the busiest times. PCs must now return to the farming communities with cash to make purchases and pay the farmers immediately. On average a PC will carry $1,500 in cash on themselves but this may go up to $10,000 at the busiest times(3).

The transaction picture we’ve covered brings with it a number of risks and inefficiencies. The cocoa industry in Ghana lacks some of the market infrastructure necessary to reduce costs and address risks in dealing with cash. Banking and financial networks do not penetrate deep into rural and remote farming communities which necessitates cash transactions. The large amounts of cash carried by PCs make them targets for robbery. At times these have been with serious violence. Robbery also poses a financial risk to the PC as they are independent agents accountable for the cash. As PCs can carry cash for cocoa purchases that amount to five times their annual salary, a robbery of this magnitude has devastating impacts. From a farmer’s perspective cash payments do not proved adequate transaction histories that are necessary to gain financial credit or insurance. The inability to take part in financial services hinders their farming productivity. Cash in the household poses difficulties for saving and in some patriarchal communities is subject to gender inequalities. LBCs face heavy interest rates on their borrowed monies which typically consume 42%-59% of their margin revenue. A shorter purchasing cycle translates to less loan time and reduced interest payments. The robbery risks faced by PCs also have an effect on the LBCs with a proportion written-off as losses. All told, the use of cash for cocoa payments cost LBCs at least 3.6% of margin revenue which presents a real financial exposure in a very thin margin sector(3).

Enter digital payments as a means to address these issues. The inefficiencies and delays around the use of cash in a poor financial infrastructure environment equates to dormant capital waiting to be deployed and cycled. Interest payments associated with those delays are significant and the physical risks of cash are ever present and growing. A payment system based on digital money removes the risk of robbery for both the PC and farmer as no cash is needed to be transported to the farm nor stored in farm households. Digital payments are also more efficient as they allow quick transfer of funds and remove the need for PCs to travel back and forth between farming communities and district offices for cash. Purchase and payment cycles could be reduced by 5 days on a 40–60 day cycle translating to interest savings for LBCs and on a daily basis, unused funds stored in PCs digital wallets can be retrieved to further reduced interest payments.

Increasingly, the provenance of food products such as chocolate, coffee and sea food is being tracked to meet the consumer demand for ethical purchasing.

Digital payments offer greater transparency and traceability along the full supply chain and allow agencies to track the sustainability and fair work conditions of the cocoa farms. LBCs will also be able to gain a near real time view of the purchases made by the PCs and therefore predict the stock flows into the warehouse.

Focus groups of farmers have given their views on the benefits of digital money with some of the groups having previously experienced a digital money system. Money in wallets was used to pay for school fees and utilities or sent to family in other regions. Money left in wallets offered a form of savings and most of the focus group said they would choose digital money over cash. The physical security that digital money offered was accepted as a benefit. Farmers reported a strong reason to choose digital money was gaining access to financial credit which remains a major obstacle to farmer development. Barriers to acceptance was a lack of trust in the digital money system with a fear of being scammed or losing money due to fees. These fears had some substance as mobile money fraud is a significant problem in Ghana(4).

With the challenges cocoa supply chains face in Ghana firmly established and the potential personal safety and financial benefits a digitised payment system could bring clear, the opportunities of a digital token based solution come to the fore. Blockchain based digital tokens and cryptocurrencies have risen in prominence recently. Their most prominent use cases have been in the financial markets of developed nations however, their inexpensive infrastructure, trust engendering cryptography, ease of access through a smart phone and ability to inclusively extend many market types to farming communities make then a prime candidate to tackle the fundamental economic issues faced by smallholder farmers in developing nations.

An agricultural focused, blockchain based, digital token that directly connects farmers to consumers strikes at the walls of isolation and offers inclusion into many of the social and economic pathways that are considered the norm in developed nations.

However, a technology solution on its own will not be successful. It requires a deep understanding of the unique farmer contexts and on the ground personnel to engage with farmers and gain their trust through education and empathetic listening. It requires a very detailed understanding of the technology and how it can be applied to bridge countries, cultures and contexts and it requires extensive experience in developed nations’ financial markets. No small requirement but in a subsequent article we will talk about an organisation with just such credentials and the digital token project they have underway.


(1) Global Chocolate Market Outlook, Expert Market Research (EMR),

(2) Growing Cocoa, International Cocoa Organisation,

(3) The Hidden Costs of Cash to Ghana’s Cocoa Sector, July 2020, World Cocoa Foundation, Better Than Cash Alliance —

(4) Akomea-Frimpong, I., Andoh, C., Akomea-Frimpong, A., and Dwomoh-Okudzeto, Y., 2020. Control of fraud on mobile money services in Ghana: an exploratory study. Journal of Money Laundering Control, 22(2): 300–317. DOI: 10.1108/JMLC-03–2018–0023




AgriUT is a digital utility token system that engages consumers through direct interactions and a means to reward and thank farmers that grow our food.