Ghana’s cocoa purchases smooth under new funding model, Cocobod CEO says
Updates Nov. 4 story with traders citing payment delays in paragraphs
By Maxwell Akalaare Adombila
ACCRA, Nov 4 (Reuters) -Cocoa purchases in the world's number two producer Ghana have been smooth and orderly in the current 2024/25 crop season under a major new funding model that has replaced a three decades-old system, the head of sector regulator Cocobod said on Monday.
In September, Cocobod replaced the previous system with one that requires global traders to give licensed cocoa buying companies (LBC's) pre-finance to buy cocoa from farmers, as well as paying Cocobod in advance to secure supplies.
Previously, Cocobod raised funds annually via syndicated loans and disbursed them to LBC's, who in turn bought beans from farmers and delivered them to the regulator for onward sale to the international markets.
According to Cocobod CEO Joseph Aidoo, the new model eliminated payment delays that plagued the old system when any delays in securing the funding rippled through the entire cocoa sector, leaving growers starved of funds and encouraging smuggling to neighbouring countries.
However, five traders who buy Ghanaian cocoa told Reuters that LBCs, especially ones not affiliated with global trade houses, were still experiencing payment delays or struggling to raise funds to buy cocoa.
They also said the new system, which they found difficult to navigate, constituted an abrupt transfer of risk from Cocobod onto the industry, which was in any case limiting purchases ahead of Ghana's general election in December.
According to Aidoo, the new funding model limited payment delays because it was more flexible, requiring LBCs to use their own funds or money from their partner traders to buy cocoa for Cocobod to sell onwards.
A disastrous harvest and increased smuggling in the 2023/24 season forced Ghana to delay deliveries of pre-sold beans to this season, resulting in losses of at least $1 billion for traders who locked in purchase prices in the futures market.
According to Aidoo, Ghana's output is expected to recover to 650,000 metric tons this season - from 500,000 last season according to industry estimates - thanks to increased pruning, hand pollination and the rebuilding of disease-infested farms.
Reporting and writing by Maxwell Akalaare Adombila; additional reporting by Christian Akorlie, Ange Aboa, Maytaal Angel and Joe Bavier; Editing by Anait Miridzhanian and Tomasz Janowski
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