GHANA – The state government of Ghana acting through Cocobod is planning to inject a US$600m stimulus package into the cocoa sector through a Cocoa Productivity Enhancement Program.
The stimulus is aimed to step up Ghana’s production to 1.5m metric tonnes by 2027 from the current figure of around 850,000 metric tons to over 1milion metric tons.
It targets rehabilitation of plantations, improvement in storage and domestic processing, stimulation of local consumption as well as efforts to increase output on farms among others.
The COCOBOD CEO Mr Joseph Boahen Aidoo, said government was opting for the 7 years’ facility which gives space to operate and to improve the sector adding that the loan facility is made up of Commercial and Developmental benefits.
He said the facility is before Parliament and once it gets Parliamentary approval COCBOD will be going to South Africa to engage the Africa Development bank to facilitate the disbursement of the money to Ghana.
Outlining the components of the loan facility, Mr Boahen said $140 million of the facility would be used to eradicate cocoa diseases, while US$82.7 million would be used for growing new cocoa trees to increase production.
“We will also commit $68million of the facility to hand pollination and pruning practices, $50million for warehousing, cocoa farmers’ electronic database, and $200million into processing and value addition,” he said.
Announcing the stimulus package, Eastern Region Information Minister, Kojo Oppong Nkrumah stated, “The Administration believes that Cocoa, being a major pillar of our economy cannot be allowed to survive at its own pace.”
“Cocoa farmers who have been the backbone of the Ghanaian economy already have good news for 2020 in cocoa price structure but now get an additional dose through this stimulus package,” Mr. Oppong Nkrumah indicated.
Ivory Coast and Ghana introduced a US$400 a tonne living income differential (LID) in July on cocoa sales for the 2020/21 season in a bid to ease pervasive farmer poverty. The move was a major overhaul in how global cocoa is priced.
Recently, the Coffee and Cocoa Council (CCC) signed a block deal with Global food and agri-business Olam International Limited for the sale of 100,000 tonnes of cocoa export contracts for the 2020/21 season that includes the living income premium, LID.
Negotiations are underway to sign other block deals with members of the “big five” cocoa buyers and exporters, Cargill, Sucden, Barry Callebaut and Touton.
With the plan of setting up the stimulus package, Mr. Nkrumah said this is the first time Ghana is focusing on a medium to Long term financing of cocoa.
“Over the years we have been taking annual syndication and when you take annual syndication invariable intended for operation purposes it doesn’t bring any capital injection into the sector, more or less growth is restrained” he said.