Ghana may only produce around 700,000 tonnes of cocoa this season, well short of its initial forecast of 850,000 tonnes, due to poor rains during the main crop harvest, the head of the Cocobod marketing board told Reuters on Monday.
The International Cocoa Organization (ICCO) forecast a global cocoa surplus of 105,000 tonnes of beans for the 2017/18 season. But concerns about the harvest in neighbouring Ivory Coast, the world’s top producer, has sent global prices soaring in recent weeks.
Cocobod CEO Joseph Boahen Aidoo said in an interview with Reuters that output by No. 2 grower Ghana was also falling short.
The country had registered purchases of around 650,000 tonnes by March 2.
“We have bought the bulk of our cocoa for the season,” Aidoo said.“We’re hoping to get something from the light crop – about 50,000 or a little above. That takes us to around 700,000 or a little above 700,000 tonnes.”
The ICCO estimates that Ghana produced around 950,000 tonnes of beans last season, though much of that is believed to have consisted of smuggled Ivorian beans.
Despite a significantly higher farmer price in Ghana than in Ivory Coast this season, Aidoo said smuggling had been minimal.
Ghana maintained its producer price at 7,600 cedis ($1,717) per tonne at the start of the season in October despite a drop in world prices.
The high price has led to a 2 billion cedi deficit at Cocobod, and in January the government proposed cutting the price, pegging it to 70 percent of world market prices.
However that plan is subject to approval by President Nana Akufo-Addo.
“Personally, I see it as a very tall order and a tough call for the President because it hinges on sustainability of the industry,” Aidoo said.
Cocobod is issuing cocoa bills to fund the deficit via the central bank, which it already owes about 5.5 billion cedis. Aidoo said the sector regulator was negotiating to have that debt restructured.
Meanwhile, he said Cocobod planned to seek around $1.3 billion in September via its annual syndicated loan to cover purchases of an estimated 900,000 tonnes of cocoa next season.
However, Aidoo said it had put on hold plans to borrow around $500 million from China Eximbank, because it had received encouraging feedback from the African Development Bank (AfDB) for a loan that would cover much of the same expenditures.
Along with Ivory Coast, Ghana is seeking $1.2 billion from the AfDB to finance projects aimed at boosting processing capacity and creating storage facilities capable of housing buffer stocks.
“Our request has received a very positive response and we are confident of having the loan,” Aidoo said.
Ghana and Ivory Coast, which together account for 60-70 percent of global supply, opened negotiations amid last season’s cocoa slump, aiming to increase cooperation in order to have more influence over world prices.
Those talks are due to resume in Accra this week, and Aidoo said harmonising farmer prices between the two growers would be at the top of the agenda.
($= 4.4250 Ghanaian cedis)
Editing by Joe Bavier and Susan Fenton
Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent. Sign up here.