Ghana is in the process of securing a $500 million loan from major cocoa traders to support its cocoa industry as delays in finalizing its usual financing arrangements continue to create challenges.
Sources from Citi Business News indicate that the Ghana Cocoa Board (COCOBOD) is in discussions with key players in the cocoa trade, including Olam Group and Barry Callebaut, to raise part of the $1.5 billion required to finance operations ahead of the upcoming cocoa season in October.
This $500 million loan is intended as a temporary solution while COCOBOD struggles to finalize its annual syndicated loan, a process currently hindered by concerns over crop yields.
This marks the second consecutive year that Ghana, the world’s second-largest cocoa producer, has had to rely on traders for interim funding.
The loan is crucial for COCOBOD, as it will be used to purchase cocoa beans from farmers, pay for fertilizers, chemicals, and seedlings, and help stabilize the nation’s currency.
However, lenders have expressed hesitation due to a significant decline in cocoa production. This year, Ghana’s cocoa output is projected to drop to just over 500,000 tons, a sharp decrease from the usual 800,000 tons.
The decline is attributed to unfavorable weather conditions, disease outbreaks, and fertilizer shortages.
In response to these challenges, COCOBOD is planning to start the cocoa season a month earlier in September to curb smuggling and allow time for the introduction of a new tracking system. This system is designed to ensure that all cocoa beans are traced from the farm to the warehouse, in compliance with the European Union’s deforestation regulations.
Efforts to obtain comments from the cocoa traders and COCOBOD regarding the ongoing negotiations have so far been unsuccessful.
