Business News of Thursday, 14 June 2012
Ghana's cocoa production is likely to be around 850,000 tonnes this season, well below its target of 950,000 tonnes, due to dry weather and a fall in prices, the head of regulator Cocobod said in an interview.
"We were expecting rainfall and the rain didn't come - that has been a problem. The way things are going the target will be difficult," said Cocobod chief executive Tony Fofie, citing 850,000 tonnes as the likely output figure.
He said that weaker cocoa prices also meant that some farmers in the world's second-largest producer might choose to withhold some of their crop from the market in hopes of a rebound.
ICE July cocoa futures hit five-month lows at $2,031 per tonne last Friday. while prices have recovered some of that lost ground in recent days, trading at $2,181 per tonne on Wednesday, they are still 13 percent below end-January levels which were close to $2,500.
Cocobod, seen as keen to protect its reputation as a low-risk loan recipient, has been probing a shortfall of around 70,000 tonnes of beans between official cocoa purchases and its inventory after buyers reported inflated volumes.
Fofie said between 10 and 15 companies have been warned over the discrepancy and an operational ban would be placed on firms that did not deliver the cocoa by the end of the main crop.
Ghana's main crop closed on May 31, but Cocobod has given buyers up to the end of this week to register their final main crop purchases.
Tight credit conditions and falling output may have pushed some local buyers, known as licensed buying companies, to overstate cocoa purchases to gain advance funding.
"In order for them to get more money to purchase more cocoa, some of them did exaggerate . We will withdraw their licences from their district for one season," said Fofie.
Ghana runs a two-cycle cocoa year consisting of a 33-week main crop which represents the lion share of the country's harvest and is mainly exported to Europe and Asia, and the minor light crop which is discounted to local processing firms such as Cargill and Barry Callebaut.
"The light crop will be very small and there's a problem for processors. They get a discount on the light crop and if they don't get it, they will have to buy it very expensive," he said.