Ghana may fall short of its 850,000-tonne cocoa output target this season due to dry weather and diseases that has hampered growing the head of regulator Cocobod has said.
The uncertainty in the world’s No. 2 cocoa grower follows months of dry, windy weather coupled with diseases, putting COCOBOD in a difficult situation to be able to fully pay back loans of $1.3 billion.
Ghana signed for the loans with lenders such as Credit Agricole SA and Natixis SA prior to the start of the annual harvest in October to pay farmers for their beans
“We are only praying that we’ll be able to meet our collateralized facility because the crop wasn’t as good as anticipated,”chief executive officer of the regulator Mr Joseph Boahene Aidoo said on Monday.
“We just started paying the first installment” in February.”
The board purchased 625,111 tons of cocoa for the season through Feb. 22, compared with 640,075 tons for the same period in the previous crop, according to a person familiar with the matter.
The COCOBOD had projected purchasing about 850,000 metric tonnes of cocoa beans in 2017, after recording impressive performances in the provisional data of purchases made for the cash crop.
While recent rains may improve yields in the smaller harvest that runs from June to September, it may not be sufficient to make up for losses suffered in the main harvest that continues until then, he said. He declined to give a new forecast for the crop.
While Ghana may not achieve its forecast for the season, it’s already selling cocoa at a loss after it chose not to lower prices for farmers even as global prices slumped by a third from July 2016 through the end of last year. The regulator is losing the equivalent of about $600 for every ton sold this season, it said in February.
The board is in talks with the government on ways to pay for operational expenses and liabilities as the cost of debt on local markets is too expensive, said Aidoo. Over the past year, it sold bills and notes at rates of as much as 22 percent, according to data compiled by Bloomberg.
“We are still discussing with government and we’ll find some solutions,” Aidoo said.
For the next harvest, the cocoa board will target a harvest of 900,000 tons and again seek to raise $1.3 billion in syndicated loans, Aidoo said.
Neighboring Ivory Coast is the top global producer.