What Are Offtake Agreements?
Offtake agreements are long-term contracts where a buyer agrees to purchase a company's future production or output at predetermined prices and quantities. These contracts provide revenue certainty and are commonly used in agriculture, mining, manufacturing, and energy sectors.
In Ghana, offtake agreements help businesses secure financing by demonstrating guaranteed future revenue streams to investors.
How You Earn Returns
Revenue Sharing
Receive percentage of revenue from offtake contract sales.
Fixed Returns
Pre-agreed returns based on contract value and duration.
Example Investment Structure
Invest GHS 100,000 to help a cocoa processor secure a 5-year offtake agreement with a European chocolate manufacturer. You receive 15% of the contract revenue until you've earned GHS 150,000 (50% return).
Key Features
Revenue Certainty
Guaranteed buyer for company's production
Price Stability
Fixed or formula-based pricing reduces market volatility
Credit Enhancement
Strong offtaker credit improves investment security
Production Focus
Company can focus on production rather than marketing
Common Applications in Ghana
Agriculture
Cocoa, cashew, shea butter, and horticulture exports
Mining
Gold, bauxite, manganese, and lithium production
Energy
Solar and renewable energy power purchase agreements
Manufacturing
Industrial products and processed goods for export
Risks to Consider
Production Failure
Company may fail to produce the contracted quantities.
Offtaker Default
Buyer may fail to honor purchase obligations.
Price Disadvantage
Fixed prices may become unfavorable if market prices rise.