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.
Showing posts with label market analyses. Show all posts
Showing posts with label market analyses. Show all posts
Tuesday, March 1, 2011
Sunday, February 6, 2011
Accra: Commodity Prices after the fuel price increases
Traders in the various markets in the capital have resorted to various strategies as they respond to the effects of last month’s petroleum price increments.
The traders' strategies, according to checks by the Graphic Business are in response to the surge in the prices of various goods which was induced by the January 4 petroleum price increments.
The Graphic Business realised that while some traders in the markets are costing their wares higher now than before and maintaining the quantities of those wares, some are doing the reverse, selling at the old prices but sliced the quantity of those same products downward as compared to their initial quantities prior to the increment.
A visit to the Kaneshie Central, Tema Station, and the Makola markets indicated that most of the traders who are into consumer goods, such as food vendors and those selling goods that do not have fixed quantities have reduced the quantity of those commodities but still sell at the initial prices.
The National Petroleum Authority, regulators of the nation’s petroleum industry on January 4 this year increased the ex-pump prices of petrol and diesel by 30 and 20 per cent respectively while citing the rising crude oil prices in the global market and the accumulating Tema Oil Refinery’s (TOR) debt as factors that necessitated the upward adjustment.
Following this, a gallon of gasoline (premium) moved up from GH¢5.26 to currently sell at GH¢6.84. That of diesel also moved up from GH¢5.31 to sell at GH¢6.91, while a kilogram of Liquefied Petroleum Gas (LPG) now sells at GH¢1.047 after the same quantity was initially sold at GH¢0.8381 prior to the increment.
These upward changes caused transport operators in the country to also adjust transport fares upward by 18 per cent across board.
As a result, the cost of transporting traders’ wares from wholesale destinations to their respective points also went up as the traders explained to this reporter.
Madam Elizabeth, a dealer in corn related products such as corn dough, gari and sugar at the Tema Station Lorry park said the wholesale prices of the products she deal in had risen following the increment.
According to her, the cost of transporting those goods to the market had also gone up causing her to reduce the quantity of the various commodities and in some cases, increase the prices.
A bag of maize, she said now sells at Gh¢ 80, a Gh ¢10 upward adjustment from its initial Gh¢70 price prior to the petroleum price increment, a situation she insisted caused her to reduce the quantity of corn dough offered at 50p.
The small alonka of gari which was sold at ninety pesewas now goes for one cedi with the price of the big alonka also stretching to two cedis from its initial price of one cedi eighty pesewas.
Though Madam Elizabeth thinks the stretch in transport fares had a direct response on prices of gari and maize, she also thought the seasonal nature of her commodities also had a hand in the price changes.
Seasonal commodities, she observed are subject to price flatuations depending on the time of the season and the nature of the harvest.
“Even if fuel prices increase, prices of seasonal commodities will still go up and come down”, Madam Elizabeth explained.
Mr Andrew Nartey, a patron of Madam Elizabeth’s corn dough also observed “the quantity of this one cedi corn dough has reduced. This, (then referring to a ball of corn dough in his possession) was sometime ago sold at fifty pesewas”.
The wholesale prices of rice had also gone up by an average of Gh¢10 which in effect induced retail prices of the various brands upward.
Though, most of the rice traders at the Tema Station Lorry park would not dismiss any direct effect of the petroleum price increases on the upward adjustments of rice prices, they insisted that the main cause of the price surge was due to taxes and the Ivoirian crisis.
According to Madam Akosua Ankah, a dealer in Uncle Sam, a brand of the Ricemaster mostly imported through Cote d’ Viore, a bag was initially selling at Gh¢ 13.50p but the crisis pulled it upward to currently sell at Gh¢15 per bag.
Prices of construction and manufacturing wares were also realised inching up following the increments.
Cement prices for instance went up by approximately Gh¢2 across the various dealers visited by the Graphic Business.
Though Ghana Cement Company (GHACEM), a major cement manufacturer in the country had not announced any price increases, most of the dealers told this reporter that the distributors who increased the prices cited last month’s fuel price increments as a factor.
Interestingly however, prices of fish and fish related products have also gone up despite the NPA's resolve to raise prices of premix fuel, a product used by fishermen for fishing, citing its economic implications on the fishing folks as the reason.
The price of sachet water, popularly called 'pure water' has also folded back to its normal five pesewas per one after it was sold at 10 pesewas in the early days of the increment.
The traders' strategies, according to checks by the Graphic Business are in response to the surge in the prices of various goods which was induced by the January 4 petroleum price increments.
The Graphic Business realised that while some traders in the markets are costing their wares higher now than before and maintaining the quantities of those wares, some are doing the reverse, selling at the old prices but sliced the quantity of those same products downward as compared to their initial quantities prior to the increment.
A visit to the Kaneshie Central, Tema Station, and the Makola markets indicated that most of the traders who are into consumer goods, such as food vendors and those selling goods that do not have fixed quantities have reduced the quantity of those commodities but still sell at the initial prices.
The National Petroleum Authority, regulators of the nation’s petroleum industry on January 4 this year increased the ex-pump prices of petrol and diesel by 30 and 20 per cent respectively while citing the rising crude oil prices in the global market and the accumulating Tema Oil Refinery’s (TOR) debt as factors that necessitated the upward adjustment.
Following this, a gallon of gasoline (premium) moved up from GH¢5.26 to currently sell at GH¢6.84. That of diesel also moved up from GH¢5.31 to sell at GH¢6.91, while a kilogram of Liquefied Petroleum Gas (LPG) now sells at GH¢1.047 after the same quantity was initially sold at GH¢0.8381 prior to the increment.
These upward changes caused transport operators in the country to also adjust transport fares upward by 18 per cent across board.
As a result, the cost of transporting traders’ wares from wholesale destinations to their respective points also went up as the traders explained to this reporter.
Madam Elizabeth, a dealer in corn related products such as corn dough, gari and sugar at the Tema Station Lorry park said the wholesale prices of the products she deal in had risen following the increment.
According to her, the cost of transporting those goods to the market had also gone up causing her to reduce the quantity of the various commodities and in some cases, increase the prices.
A bag of maize, she said now sells at Gh¢ 80, a Gh ¢10 upward adjustment from its initial Gh¢70 price prior to the petroleum price increment, a situation she insisted caused her to reduce the quantity of corn dough offered at 50p.
The small alonka of gari which was sold at ninety pesewas now goes for one cedi with the price of the big alonka also stretching to two cedis from its initial price of one cedi eighty pesewas.
Though Madam Elizabeth thinks the stretch in transport fares had a direct response on prices of gari and maize, she also thought the seasonal nature of her commodities also had a hand in the price changes.
Seasonal commodities, she observed are subject to price flatuations depending on the time of the season and the nature of the harvest.
“Even if fuel prices increase, prices of seasonal commodities will still go up and come down”, Madam Elizabeth explained.
Mr Andrew Nartey, a patron of Madam Elizabeth’s corn dough also observed “the quantity of this one cedi corn dough has reduced. This, (then referring to a ball of corn dough in his possession) was sometime ago sold at fifty pesewas”.
The wholesale prices of rice had also gone up by an average of Gh¢10 which in effect induced retail prices of the various brands upward.
Though, most of the rice traders at the Tema Station Lorry park would not dismiss any direct effect of the petroleum price increases on the upward adjustments of rice prices, they insisted that the main cause of the price surge was due to taxes and the Ivoirian crisis.
According to Madam Akosua Ankah, a dealer in Uncle Sam, a brand of the Ricemaster mostly imported through Cote d’ Viore, a bag was initially selling at Gh¢ 13.50p but the crisis pulled it upward to currently sell at Gh¢15 per bag.
Prices of construction and manufacturing wares were also realised inching up following the increments.
Cement prices for instance went up by approximately Gh¢2 across the various dealers visited by the Graphic Business.
Though Ghana Cement Company (GHACEM), a major cement manufacturer in the country had not announced any price increases, most of the dealers told this reporter that the distributors who increased the prices cited last month’s fuel price increments as a factor.
Interestingly however, prices of fish and fish related products have also gone up despite the NPA's resolve to raise prices of premix fuel, a product used by fishermen for fishing, citing its economic implications on the fishing folks as the reason.
The price of sachet water, popularly called 'pure water' has also folded back to its normal five pesewas per one after it was sold at 10 pesewas in the early days of the increment.
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