The political tussel in the Cote d' Iviore, the world's leading producer of cocoa has sent prices of the commodity pulling up. But can Ghana, the second largest producer of the crop take advantage of the hiking global cocoa prices to rake in more revenue? Maxwell Adombila Akalaare reports
Ghana’s revenue from cocoa exports is likely to stay same despite soaring prices of the commodity on the international market.
The Ghana Cocoa Board (COCOBOD), which oversees all activities relating to the crop says the country’s buying arrangements in which a large quantity of the commodity is sold in advance has denied the nation any gains from the current escalating global prices.
The Public Relations Officer of the board, Mr Noah Kwesi Ameyah explained to the Graphic Business that the country’s beans are always used as a syndicate for loans “even before they are produced”.
“We always need money (loans) for the farmers to enable them go into production. But before we can get those loans, we need to garantee for them. So we sell forward a certain quantity of the cocoa yet to be produced,” Mr Ameyah explained.
Global cocoa prices have been stretching up since the political crisis in Cote d’ Ivoire begun late last November.
The political stand off between Laurent Gbango and Alhassan Outtara induced the prices up from about US$2,279 before the start of the tension to close the year at well over US$3,000.
Cocoa prices again started the year on record highs after the crisis continued to protract in the world’s leading cocoa producing nation.
Following a one month ban placed on export of the commodity by Alhassan Outtara on January 22, prices of the commodity again jumped to a record year high of US$3,340 per metric tonne and currently sells at (today’s price) raising speculations among local industry experts and dealers that Ghana, the second largest producer of the crop would as well reap maximum revenues from the high prices.
But the PRO of the nation’s cocoa governing body, explained that Ghana’s buying arrangements makes taking advantage of the present Ivorian crisis very minimal.
According to him, Ghana as at September last year had already used about 700,000 tonnes of yet to be produced cocoa beans as garantee to a US$1.5 billion loan that it needed to finance this season’s productions.
The Managing Director of the Cocoa Marketing Company (Ghana) Limited, the marketing subsidiary of the COCOBOD Nana Oduro Owusu last Thusday lauded the advance buying strategy of the board saying the move has even made it possible for the COCOBOD to determine a free on-board (FOB) price.
According to him, COCOBOD’s success in external borrowing for the trade facility which, in the last 16 years has enabled the board to finance cocoa purchasing was due to the forward buying strategy.
“Quite a large quantity of Ghana’s cocoa has been sold already,” the PRO said noting further that the buying arrangement makes it impossible for the country to reap from any ripples that may always emerge in the market.
Prices of cocoa at the time of Ghana’s syndication of the 700,000 metric tonnes were barely inching above US$ 2,800.
“You see, cocoa production is not done in the factory. If the tree produces 400 beans, you do not expect that same tree to give you 800 just because there is a boom in the price of the commodity in the market. Increased production means more time, years and prices at those times would as well be determined by prevailing situations “, the PRO stated.
On the present world prices, Mr Ameyah said “it is good news for the cocoa community” but only in the “short term”.
He explained that continues price soars would much likely cause cocoa buyers and users to begin to look for substitutes to the commodity, a situation the PRO further observed could as well cripple the entire cocoa industry.
According to him, it was the COCOBOD’s resolve that the present Ivorian crisis would end soon “for the Cote d’ Ivoire cocoa farmer to get back his money”.
But about the Ghanaian farmer, Mr Ameyah said the current higher prices in the global cocoa market meant “higher bonuses to them”.
“They would always benefit because of the bonuses we pay to them. If we sell above the anticipated market prices, then we would pay bonuses to them”, he added
Torching on production capacity, Mr Ameyah expressed optimism that the measures put in place by the board would yield higher production results in the coming years.
The COCOBOD has a production target of 800,000 metric tonnes in the 2011 season and a one million metric tonne by 2013.
And its CEO, Anthony Fofie said the company is “edging closer to the one million metric tonne target”.
Last year’s better weather conditions coupled with other management factors increased the crop’s production making it possible for the COCOBOD to buy about 643,000 metric tonnes of the bean from farmers within the year.
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