The Cabinet has issued a directive for the immediate payment of all cocoa farmers affected by the delayed payment.
This is geared towards bringing relief to unpaid cocoa farmers, the Minister for Finance, Cassiel Ato Forson, said during a press briefing on Thursday.
Cause of Delay
The Minister attributed the delayed payment to the 2024/25 financing model and the unwillingness of buyers to purchase Ghana’s cocoa due to the high price compared to the prices from other producing countries.
On the issue of the financing model where buyers (off-takers) financed the purchases, Ato Forson divulged that COCOBOD did not have the liquidity to purchase cocoa from them and stock for hedging or other trading decisions.
The model takes its root from the deterioration of COCOBOD’s finances in 2022, which resulted in a default and restructuring of the Cocoa Bills in 2023, he explained.
“For the first time, in 2023, the annual syndication suffered significant delays due to loss of confidence in the Ghanaian economy. The first tranche was received on 22nd December 2023, four months after the commencement of the season. COCOBOD projected an output of 800,000 tonnes, and committed 786,672 tonnes in contracts in the 2023/24 crop season. However, actual production was 432,145 tonnes, a deviation of 45% from the projected output.
“Variations in crop forecasts typically vary between 5% to 15%. Hence, a deviation of 45% was unprecedented. This resulted in huge rollover contracts of 333,767 tonnes at an average price of US$2,661 per tonne.”
This resulted in over US$1 billion loss that year and continued into 2024, where COCOBOD could not pay the final tranche of the syndicated loan due in July 2024.
According to him, the Finance Ministry intervened with a US$70 million bridge financing to avert a default.
The amount was, however, not paid by COCOBOD.
Mismanagement
The Minister accused the previous management of the Ghana Cocoa Board of mismanagement.
“A careful review of the cocoa sector over the last eight years revealed gross mismanagement, which requires immediate and comprehensive reforms to address the challenges in the sector.”
Story by Hajara Fuseini
Source:
opemsuo.com