Ghana is actively negotiating a $500 million loan with major cocoa traders to support its cocoa industry as delays in securing traditional financing arrangements persist.
The Ghana Cocoa Board (COCOBOD) is engaging with critical traders such as Olam Group and Barry Callebaut to secure this interim funding ahead of the cocoa season starting in October.
This loan is crucial for COCOBOD, which will use it to purchase cocoa beans from farmers, fund the procurement of fertilizers, chemicals, and seedlings, and help stabilize the national currency.
However, the need for this emergency loan arises from delays in finalizing COCOBOD’s annual syndicated loan, a process that concerns declining crop yields could improve.
For the second consecutive year, Ghana, the world’s second-largest cocoa producer, is turning to traders for temporary financing.
The $500 million loan is essential for maintaining the continuity of cocoa production and economic stability.
A significant projected decline in cocoa production underscores the urgency of this loan.
Ghana’s output is expected to fall to just over 500,000 tons this year, substantially dropping from the usual 800,000 tons.
This decrease is attributed to adverse weather conditions, disease outbreaks, and fertilizer shortages.
In response to these challenges, COCOBOD plans to commence the cocoa season a month earlier than usual, in September.
This adjustment aims to combat smuggling and facilitate the implementation of a new tracking system.
The system is designed to trace cocoa beans from farms to warehouses, aligning with the European Union’s deforestation regulations.
Despite efforts, comments from both the cocoa traders and COCOBOD regarding the ongoing negotiations have yet to be obtained.
The outcome of these discussions will be pivotal for Ghana’s cocoa industry as it navigates these financial and logistical challenges.
