Ghana bags additional GH¢1 billion over worsening COCOBOD Debt

Ghana has lost GH¢1 billion to falling cocoa prices in the last four months of the year, worsening the plight of the Ghana Cocoa Board (COCOBOD), which is now coming to terms with a GH¢10 billion debt discovered recently.

The debt, which is due to the rising cost in the past years, could combine with the weakening cocoa prices to cripple plans by the board to raise cocoa output and improve the lot of the sector through targeted interventions to staff, farmers, extension officers and domestic grinders of the bean.

Already, the Chief Executive Officer (CEO) of the board, Mr Joseph Boahen Aidoo, has said end of year bonus for staff has been cancelled “because we are settling debts.”

The situation has also forced the board to dip its hands into the Cocoa Stabilisation Fund (CSF) established a few years ago to serve as a buffer against falling prices, Mr Aidoo added.

The fall back on the fund is to help cushion farmers against the impact of the price decline.

Mr Aidoo told journalists on June 6, 2017 that in its current state (US$1,800 per ton), the country, through the board, was paying some US$400 more on every ton of cocoa exported.

COCOBOD used US$2,950 as the benchmark price per ton for the 2017/18 cocoa season, about US$890 lower than the current crop prices, which averaged US$2,059 on June 12.

Declining earnings

Already, figures from the Bank of Ghana show that revenue from cocoa dropped from US$1.18 billion in May 2016 to US$1.14 billion in May, this year, representing 7.7 per cent.

This poses a threat to the government’s revenue target of GH¢3.9 billion from the sector this year.

The GH¢1 billion lost in the year means that the government is already about 25.6 per cent shy of its end-year target.

Mr Aidoo, however, gave an assurance that efforts were being made to settle the debt by the end of September.

On the declining prices, he said, “we just hope that the price fall does not go very deep because if it does, we will exhaust all our stabilisation fund and we will be in deep problem.”

Should the fund be exhausted, Mr Aidoo said the board would be forced to borrow to cushion itself against the falling price.

Support from AfDB

As part of measures to revamp the cocoa sector, Mr Aidoo also pointed out that COCOBOD was currently holding discussions with the African Development Bank (AfDB) to provide money to compensate farmers who would be affected by the Cocoa Rehabilitation Programme.

The programme is aimed at rehabilitating about 10,000 hectares of diseased and overage cocoa farms in the Western North and Eastern regions this year.

The project will involve the removal of 11 million trees for replanting.

Currently, he said about 17 per cent of cocoa area surveyed, which is about 309,830.73 hectares, was affected by the Cocoa Swollen Shoot Virus Disease (CSSVD) while about 23 per cent (411,086.41 ha) of the country’s cocoa tree stock was more than 30 years and economically unproductive.

“The experience we have had is that in the past, farmers were asked to cut the trees and they were given free seedlings to replant but this did not work. It did not work because, once you cut the trees, it means that you are cutting their source of livelihood for the household so farmers showed no interest,” he said.

“We have identified that problem and what we want to do now is introduce an inducement package for the affected farmers. We are, therefore, holding discussions with the AfDB to provide us with money to give to the affected farmers who want to go into the rehabilitation programme,” he added.

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