The case for floating Cocoa Processing Company on the GSE

By Amos Safo

An Economic Consultant, Dr. Owusu Akoto has urged the government to consider floating part of Cocoa Processing Company (CPC) on the Ghana Stock Exchange to enable the company to tap local capital for expansion.

Fresh capital, combined with internally generated resources and some debt acquisitions would enable the company expand its capacity and brace up for competition.

Dr. Akoto, a consultant to the International Cocoa and Coffee Organisation made the recommendation at a lecture on "Adding Value to Agricultural Products-The Case of Cocoa in Ghana". The lecture was organised by the Busia Foundation as part of activities to educate the public pertinent national issues.

Dr. Akoto said if the CPC is strengthened, it could become a flagship for agro-processing in the country. Produce Buying Company, also a subsidiary of Ghana Cocoa Board is already Trading on the Ghana Stock Exchange.

According to Dr. Akoto, from its published accounts over the last couple of years, the company has been showing rising profits, paying dividends to its shareholders and expanding plant capacity. Its cocoa factory currently has processing capacity of 25,000 metric tones.

Besides, the company has plans to invest US$20 million to double annual production capacity to 50,000 metric tones within the next two years. The confectionery capacity has 2,200 metric tones of chocolate and courverture and 1,200 metric tones of chocolate powder. He said over the next three years the company has plans to expand to 5,000 metric tonnes chocolate and courverture and 2,000 metric tonnes of chocolate powder.

Despite its quality products the CPC has found it difficult penetrating traditional chocolate consuming countries in Europe. Dr. Akoto observed that, as the only locally owned company with no links to multinationals CPC is at the moment striving to find export market for their confectionery. ‘Initiatives have been made in the United States, China and Russia. This effort should be encouraged".

Chocolate manufactured by CPC is reputed to have good quality and has even won about twenty international awards. But that is as far it goes. It is very difficult to locate made in Ghana chocolate on European shelves.

That is not all. CPC also faces serious competition in the area of exporting semi-finished cocoa products against West Africa Oil Mills (WAMCO 1and 2) both based in Takoradi and owned by the Hosta Group, one of the biggest multinationals in the area of cocoa processing. The two factories in Takoradi are estimated to have a joint annual capacity of 80, 000 metric tonnes.

Dr Akoto explained that while CPC exports nearly all its semi-processed products, WAMCO 1 and 2 supply their products to Hosta Group at prearranged prices. He said given the uncertainities on the international market Ghana has found it difficult to ascertain the basis of determining the export prices of WAMCO. Dr. Akoto noted that the prices at which these products are supplied abroad should relate to the world market if Ghana is to gain maximum foreign exchange from such exports.

He said since these companies supply to the parent companies abroad, their prices should be transparent. "The prices should be monitored by Ghana Cocoa Board to ensure that they reflect those prevailing on the world market.

Dr. Akoto pointed out that for the economy to maximize the benefits of cocoa there is need for government to strike a deal with the foreign companies for commitments to invest in the manufacture of confectionery products.

Meanwhile, another international cocoa processing company, Barry Callebaut of Colina Holdings is almost set to start production here. Callebaut is one of the specialist companies, which has taken advantage of the new free zone facility in Ghana to set up a processing plant at the industrial and port city of Tema. The plant, now under construction will have an annual processing capacity of 60, 000 metric tonnes.

Dr. Akoto made a forecast that over the next two years the combined installed capacity of the processing industry could increase from the current 105,000 metric tonnes to 190, 000 metric tonnes. Compared to average annual cocoa bean production of some 400,000 metric tonnes, the annual processing of 190,000 metric tonnes would represent 48 percent of the country’s annual cocoa output.