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Business News of Tuesday, 25 June 2013

Source: Economy Times

Ghana’s cocoa purchases decline by 17 percent

The purchases of Ghana’s cocoa on the international market have dropped by17.3 percent for 2012/2013 main crop season. The purchases for the first twenty-nine weeks were 658,663 tonnes compared with 796,394 tonnes for 2011/2012 during the same period representing a decline of 17.3 percent.

But 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 in the areas where almost 55 percent of Ghana’s cocoa is produced which was likely to lower the 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 achieved one million tonnes of cocoa during the 2010-2011crop-season but declined to about 850,000 tonnes last season.

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 GHc3,280 to GHc3,392 per tonne. A bag of cocoa beans is currently sold at GHc212 from GHc205 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 the near term, cocoa prices are expected to be supported by a smaller crop harvest in Côte d’Ivoire and improving chocolate consumption, especially in the emerging market economies. However, concerns about demand in Europe – the world’s largest user of cocoa – amid the euro zone growth slowdown add to bearish sentiments.

Currently, Cocobod is seeking to raise US$1.2billion from a pre-export syndicated finance loan to purchase cocoa in the 2013/14 season.

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 Général

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