Cocobod seeks US$2bn syndicated facility

…hopes to purchase 900,000m/t of cocoa beans for 2016/2017

The Ghana Cocoa Board (Cocobod) is seeking to raise US$2billion from a pre-export syndicated facility to enable it purchase about 900,000 metric tonnes of cocoa beans in the 2016/17 crop season.

This figure is higher than the US$1.8billion that was approved and raised by the Board in the 2015/16 crop season for purchasing some 850,000 metric tonnes of the beans.

The Ministry of Finance, in view of this development, has presented a paper to Parliament asking for approval to enable Cocobod raise the needed facility from a consortium of international banks to finance purchasing cocoa beans for the crop season. 

A Deputy-Minister of Finance, Mr. Cassiel Ato Forson who laid the paper in Parliament, said the loan is to enable Cocobod raise adequate funds to purchase cocoa beans from farmers through licenced buying companies (LBCs).

He requested Parliament to waive the stamp duty, for which government will serve as guarantor. The paper showed that Cocobod will be required by the Stamp Duty Act, 2005 (Act 689) to pay one percent as tax on the facility. 

As of February this year Cocobod started repayment of its last-season loan, which attracted an interest rate of 1.19 percent. 

Cocobod has consistently been raising syndicated loans through local and international financers for cocoa purchases.  The Board is expected to spearhead a road-show, which will involve lead arrangers of the syndicated facility once approval is granted.

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

In 2013, 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 that 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

The Board is optimistic of achieving its 2015-2016 crop-year harvest target of 850,000 metric tonnes, though the harmattan weather conditions at the beginning of this year impacted negatively on farming activities.

“We are on course to achieve our target for 2015/2016.  We set for ourselves 850,000m/t and so far, from the production that we have had till now, we are on course to achieving it.

“The weather conditions will not affect output of cocoa yields.  If you compare the production levels of last year and this year, it shows an improvement; the country is doing well in spite of the fact weather was severe and the harmattan season was very long.

“We are looking forward to achieving the target that we have set for ourselves because the performance has been good,” said Cocobod’s Public Affairs Manager, Noah Kwasi Amenyah.

The Board set a target of 850,000 metric tonnes for the 2015/2016 -- up from the 800,000 metric tonnes of the previous crop season. 

A combination of factors including unfavourable weather conditions led to the country missing its target.  

The country operates a two-cycle cocoa year consisting of a 33-week main crop (October-June) that 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.   

Government in October last year announced an increase in the Producer Price (PP) of cocoa to GH₵6,720 per tonne from GH¢5,520 per tonne for the 2015/2016 season.

The figure translates into GH¢420 per bag of 64kg gross, representing an about-73 percent of the net Free on Board (FOB) price. 

Government and Cocobod decided to pay bonus to farmers at the time of sale of their produce, and an additional amount of GH¢5 per bag of 64kg gross weight was also approved. 

He said for each 64kg gross weight bag of cocoa sold by the farmer, the farmer will be paid GH¢420 per bag plus GH¢5 as bonus -- and urged  Licenced Buying Companies (LBCs) to take note and pay farmers accordingly.