Cocobod targets US$1.25bn syndicated facility

The Ghana Cocoa Board (Cocobod) is seeking to raise US$1.25-billion from a pre-export syndicated finance loan to purchase cocoa in the 2013/14 season, B&FT has gathered.
 

B&FT also gathered that the banks involved in the syndication include Rand Merchant Bank and Nedbank, both from South Africa; Bank of Tokyo Mitsubishi UFJ (BTMU); Crédit Agricole; and Société Générale.

Three groups of banks are bidding for the deal this year, unlike last year when only one group of 13 banks approached Cocobod.

Noah Kwesi Amenyah, Public Affairs Manager of Cocobod, told the B&FT in an interview that the Board is spearheading a road-show, and this will involve the lead arrangers of the syndicated facility.

Cocobod raises syndicated loans through local and international financers in Europe for cocoa purchases annually.

Industry analysts are anticipating that the loan will be oversubscribed like previously -- which will reflect the confidence of the international financial market in Cocobod’s operations and in Ghana’s potential as a cocoa producer.

Last year, Standard Bank Group -- which assisted Cocobod to secure a facility, asked African banks to be active in trade financing on the continent as international commodity traders are turning to “African banks to finance trade transactions as the global economic slowdown, the euro-zone debt crisis, and tougher capital requirements force international banks to pull back their lending in Africa.”

Cocobod secured US$2billion to fund cocoa purchases for export in its 2011/12 cocoa season. The facility, which was oversubscribed by over 20 international and Ghanaian banks, was the biggest since 1992 when Ghana turned to the international financial market to raise short-term funds to support cocoa purchases. 

Some of the banks involved in arranging last year’s facility included Barclays Bank, Standard Chartered Bank, HSBC, SG-SSB, Ghana International Bank, Agricultural Development Bank, Citibank, Ecobank and First Rand, among others. 

Production target

Cocobod is optimistic of achieving its 2012-2013 crop-year harvest target of 800,000 metric tonnes, though the rains delayed this year.

Early this year, the rainfall pattern in the south and north of the Western Region -- where around 55 percent of Ghana’s cocoa is produced -- was very bad, raising fears that the harvest may be lower than projected.

Mr. Amenyah confirmed that though the rains did not start early, there are signs that this year the Board will attain its projected target.

Ghana operates a two-cycle cocoa year consisting of a 33-week main crop (October-June), which is mainly exported to Europe and Asia, and the minor light crop (11-week), which is discounted to local processing firms including the state-owned Cocoa Processing Company (CPC).

Ghana produced an unprecedented one million tonnes of cocoa during the 2010-11crop-year, thanks to good weather and improved farming techniques, but production declined to about 850,000 tonnes last season. Cocobod said cocoa production tends to fall slightly after a bumper year.

Government in October last year announced a marginal increase in the producer price of cocoa for the 2012/13 season, despite a more-than-10 percent slump in the crop’s world price in the 12-month period to that announcement. 

The producer price was reviewed upwards by 3.4 percent, from GHȼ3,280 to GHȼ3,392 per tonne. A bag of cocoa beans is currently sold at GHȼ212 from GHȼ205 previously, representing 78.42% of the net Free on Board (FOB) value of the crop.

Government also reduced its share of the 2012/13 cocoa export duty drastically in order to raise the producer price paid to farmers. Farmers were faced with declining world cocoa prices from US$3,000 in 2011/12 to US$2,300 in 2012/13.

In addition to the higher producer price, farmers will continue to benefit from free improved seedlings, mass-spraying, rehabilitation of farms and scholarships for their children.

Ghana is the second-biggest producer of cocoa in the world, with an estimated 800,000 people said to benefit directly from cocoa production.