Dr. Owusu Afriyie Akoto
MINISTER FOR Food and Agriculture, Dr. Owusu Afriyie Akoto, has revealed that no domestic cocoa processing company or business has benefitted from the revolving capital of US$200 million secured for the Ghana Cocoa Board (COCOBOD).
According to him, the undrawn balance of US$250 million of the US$600 million AfDB/Credit Suisse 7-year loan facility that includes the US$200 million revolving capital, has been cancelled due to some reasons.
Answering questions on the floor of Parliament yesterday, the minister said uncertainty with crop forecast and unfavourable prices were the key reasons for the cancellation.
Under the uncertainty with crop forecast, Dr. Akoto said actual cocoa production was 1,047,385 tonnes for the 2021/2022 crop year, adding that “this production volume enabled additional drawdown to arrive at the cumulative drawn amount of US$350 million by 12th August, 2021.”
He stated that a forecast tonnage of 918,000 was projected for the 2021/2022 crop year at the beginning of the season in October 2021.
He noted, however, that extreme dry weather conditions have led to the revision of the crop outlook to 821,000 tonnes and corollary scaling back of the drawdown on the 2021/2022 annual syndicated facility.
“An amount of US$1.45 billion out of the signed amount of US$1.5 billion of the 2021/2022 annual facility was drawn due to the downward revision of the crop. The same reason informed the decision to cancel the undrawn balance on the long-term facility,” he submitted.
Unfavourable Price
The minister reported that cocoa prices took a tumble on the international market following the advent of the COVID-19 pandemic.
“The low prices persisted throughout 2020. Even though some price recovery seems to be coming up, the market still remains volatile,” he asserted.
He said the combined effect of low prices and downward revision of the 2021/2022 crop forecast makes it difficult for COCOBOD/CMC to generate enough cocoa contracts to collateralise further drawdowns under the long-term facility.
“Considering the expiration date of 11th November, 2022, COCOBOD will have to seek further extension of the availability period in order to have enough time in generating adequate cocoa contracts to support additional drawdown under the facility,” Dr. Akoto pointed out.
According to him, this would bring additional cost to COCOBOD in terms of commitment fee charges, granted that the additional extension would be accepted by leaders.
“Considering the current financial commitments of COCOBOD, the best decision after analysis of all feasible options was to cancel the undrawn balance to achieve financial prudence,” he concluded.
BY Ernest Kofi Adu, Parliament House