Ghana Cocoa Board may be on the verge of defaulting on its cocoa contracts with some international buyers.
The West African nation is reeling under an unprecedented scale of cocoa smuggling to neighbouring countries Togo, Cote d’Ivoire and Burkina Faso.
According to weather data, the world’s number two top producer of cocoa beans has enjoyed a favourable rainfall and weather pattern this year fanning hopes of a rebound from a poor rally last year.
But Cocobod’s Chief Executive, Joseph Boahen Aidoo, says in spite of the good weather, production figures from key districts over the period October to February have been below projections.
“Take Volta Region, for instance, in the heat of last year’s drought it produced 5,000MT but rather shockingly Volta has given us only 800MT this year in spite of the massive rainfall enjoyed across the country,” said Aidoo.
Last year, Ghana could only manage a 680,000MT output due mainly to drought coupled with other factors.
But with the prevailing perfect combination of rainfall and sunshine, Cocood was upbeat projecting to end the year with an output of about 900,000MT.
Data reveals that during the 2021/22 drought year, the country recorded 420,000MT in the peak period of October-February against a projection of 600,000MT.
Ghana’s cocoa chief notes “However, by February this year purchases stood at a disappointing record of 550,000MT.”
The staggering shortfall necessitated a production data audit which is said to have raised red flags about some unusual activity in cocoa-producing border districts.
“Over this same period, non-border districts have been recording a 24% – 28% increase in production over the same period last year,” reported Mr Aidoo.
Further investigation is said to have pointed to active cocoa smuggling activities in those border areas.
“Burkina Faso with no cocoa trees, has exported about 100,000 MT of cocoa this year. How is that possible?” the Cocobod boss quizzed.
Price differentiation
The heightened spate of cocoa smuggling to neighbouring countries is said to have been sparked by steep differentiation in the farmgate price of the commodity.
While a bag of cocoa is selling for GHS800 in Ghana, unofficial sources say Togo and Cote d’Ivoire are offering the equivalent of GHS1,500 and GHS1,350 respectively for the same bag.
Whereas Ghana has historically maintained a higher cocoa producer price over its neighbours, an unprecedented deterioration in the value of the local currency against the US Dollar last year meant a higher price would demand subsidies.
Remedial Action
The management of Cocobod earlier this month issued a directive suspending the distribution of its heavily subsidised agro-input to cocoa farmers in border districts.
The action meant to tackle the alleged farmer complicity in cocoa smuggling has since been withdrawn.
Default looming
But during a rare engagement with civil society organisations in the cocoa sector together with a cross-section of cocoa farmers from cocoa-producing border districts, Mr Boahen Aidoo warned of dire implications for the country if cocoa smuggling is not halted.
“Now, the stark reality is that we are not getting the cocoa to redeem our contracts. We are about to default,” he intimated.
He added, “It is scary and quite uneasy that Cocobod may not be able to mobilise enough cocoa to redeem sales contracts abroad, a situation that threatens to sink the Board deeper into debt.”
The Cocobod Chief Executive explained that being caught in unfulfilled contracts could be injurious to the credibility of Cocobod on the international market as well as spell doom for its syndicated loan campaigns.
The Board’s anti-smuggling task force has been quite active lately having successfully intercepted some consignment of cocoa headed for neighbouring countries.
Mr Aidoo assured that Cocobod is collaborating with the country’s security agencies to fight the menace.
He, therefore, has solicited the support of farmers, civil society and all stakeholders to help arrest cocoa smuggling activities.
