Ghana Cocoa Board, hit by financial crisis as a result of poor harvest this year may struggle to fully pay back $1.3 billion dollar cocoa syndicated loan.
Chief Executive of Ghana COCOBOD, Joseph Boahene Aidoo who at the beginning of this year expressed optimism about increased production because of some interventions the Nana Addo administration had put in place has revised his position.
According to him, Ghana will probably not meet its target of 850,000 metric tons due to dry conditions.
The world’s second-biggest grower signed for the loans with lenders such as Credit Agricole SA and Natixis SA prior to the start of the annual harvest in October to pay farmers for their beans.
While recent rains may improve yields in the smaller harvest that runs from June to September, they may not be sufficient to make up for losses suffered in the main harvest that continues until then, he said. He declined to give a new forecast for the crop.
Mr Boahene Aido is quoted by Bloomberg as saying …quote …“We are only praying that we’ll be able to meet our collateralized facility because the crop wasn’t as good as anticipated,” Aidoo said. “We just started paying the first installment in February.”
The board purchased 625,111 tons of cocoa for the season through February 22, compared with 640,075 tons for the same period in the previous crop, according to sources.
While Ghana may not achieve its forecast for the season, it’s already selling cocoa at a loss after it chose not to lower prices for farmers even as global prices slumped by a third from July 2016 through the end of last year.
Myxyzonline has learnt that COCOBOD is losing the equivalent of about $600 for every ton sold this season.
The board is in talks with the government regarding ways to pay for the operational expenses and liabilities as the cost of debt on local markets is too expensive.
Over the past year, COCOBOD sold bills and notes at rates of as much as 22%, according to data compiled by Bloomberg.
The CEO of COCOBOD however says for the next harvest, it is targeting a harvest of 900,000 tons and again seek to raise $1.3 billion in syndicated loans.
Last month, the International Cocoa Organization forecast a 900,000 tons harvest for the season. And Ivory Coast is still the top global producer, which ironically recorded increased production this year.
Source: Ghana/myxyzonline.com/Business Flash