Ghana is talking with cocoa traders to borrow $500 million to finance industry operations, as it faces delays in concluding an annual syndicated loan from its usual lenders amid uncertainty over crop output.

Industry regulator Ghana Cocoa Board is negotiating with bean traders including Olam Group Ltd. and Barrry Callebaut AG to raise at least a third of the $1.5 billion it wants to borrow, according to people familiar with the matter. 

The funds will serve as a bridge as it continues discussions with banks before the season starts in October, the people said, declining to be identified because the information is still private.

A spokesperson at Barry Callebaut declined to comment while that of Olam did not respond to emailed request seeking comment. Cocobod spokesman Fiifi Boafo declined to comment.

This is the second consecutive season that the world’s second-biggest grower of the key ingredient in chocolate has turned to dealers in the beans for funding because it failed to arrange the annual syndicated loan in time. 

The board relies on the facility to pay for seedlings, chemicals, fertilizers and to buy beans from farmers, while the foreign exchange helps the central bank keep the nation’s currency stable.

Cocobod usually signs the syndicated facility in September, just before the season opens. But negotiations were complicated last year by Ghana’s debt restructuring, delaying the bank loan until December. 

That forced it to borrow $400 million from cocoa traders in November, followed by another $200 million in March after lenders declined to release the final tranche of the $800 million facility.

Banks withheld the money amid concern over the nation’s cocoa revenues due to a slump in output, which left the global market facing a shortage for the third straight year.

A combination of unfavorable weather, disease and a lack of fertilizers curbed bean harvests in Ghana and top producer Ivory Coast, sending futures prices earlier this year above $11,000 per ton for the first time.

While Ghana expects output to recover about 40% to 700,000 tons in 2024-25, banks are skeptical, Bloomberg reported Aug. 2.

The scepticism stems from disappointment at the crop from the past three years. Against a minimum production target of 800,000 tons, Ghana harvested 683,000 tons in 2021-22, dropping to 654,000 tons in 2022-23 and is heading for another decline to 501,000 tons by end-September, according to International Cocoa Organization data.

The country also has at least 250,000 tons of forward sales contracts that are yet to be fulfilled, some of which have been rolled over from three years ago.

The board plans to start this year’s season a month earlier in September to safeguard stocked beans from being smuggled, the people said. That’s one of the reasons why it wants funding early, they said.

Starting in September will also allow more time to implement a new cocoa management system to ensure compliance with European Union deforestation rules, in which farmers use special ID cards with the coordinates of their farms to ensure that all beans are traced from farm gate to warehouse.