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Voice of Cocoa

Ghana Cuts Cocoa Loan Target Over Declining Output

Ghana will have $330 million less funds to purchase its 2023/24 cocoa crop as compared to the last season.

Officials had projected to secure $1.2 billion in the annual roadshow to raise a syndicated credit facility for purchasing cocoa from farmers.

But the country’s central bank governor has hinted that that expectation may not be realised after securing only $800 million.

“I think that they are still getting the syndicated loan. But it’s just that the size of the syndication is gone from, I think, $1.2b to $800m,” said Dr Ernest Addison, the governor of the Bank of Ghana, at a joint IMF-Ministry of Finance press conference in the Ghanaian capital, Accra.

This year’s expected syndicated loan sum is $330 shy of the $1.13 pre-export receivables backed trade finance facility received last year at a cost of SOFR plus 1.75 per cent.

An industry expert told Cocoa Post the figure may have been revised downwards due to the size of the crop expected.

He also argued that it was most probable the regulator (Cocobod) may have slashed the original loan amount on account of favourable world market prices, which makes spot sales more ideal over forward sales.

Ghana Cocoa Board (Cocobod) has yet to announce how much cocoa it projects to purchase for the 2023/24 crop season which opened one month early on September 9.

Production output in the world’s second-largest cocoa producer nation has been dwindling in the past few years, primarily due to the Cocoa Swollen Shoot Virus Disease (CSSVD) and adverse weather patterns.

Cocobod is expected to lower its 2022/23 total output by around 11% less than a targeted 750,000 tonnes on the back of the situation, Reuters said on Friday.

In the previous, drought and illegal gold mining activities are said to resulted in a decline in output forcing Cocobod to revise its 850,000MT target for the year to 650,000MT, with an estimated loss of $350 million in revenue projections.

Meanwhile last month, Ghana increased its cocoa producer price to GHS20,943.84 (USD1,821) per tonne and GHS1308.99 per 64kg bag of cocoa beans for the 2023/24 crop season.

The new price represents a historic 63.6% price hike over the just-ended season’s GHS800 per bag.

It is unclear how soon the $800 million syndicated loan facility will hit Cocobod’s account for onward disbursement to give a push to internal marketing activities upstream.

Kojo Hayford
Source Cocoa Post
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