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    Monday, May 27, 2024

    Ghana's Cocoa Regulator Will Borrow Up to $1.5 billion for 2024-25 Cocoa Purchases

    Ghana’s cocoa regulator will borrow up to $1.5 billion through September to finance cocoa purchases in 2024/25 and make up for low production, two COCOBOD sources with knowledge of the deal said on Sunday.

    The world’s second-largest cocoa producer after neighboring Ivory Coast uses an annual syndicated loan to finance bean purchases from farmers. It is usually remembered at the beginning of the season in September.

    But this year’s $800 million loan was delayed due to low cocoa production so far this season.

    COCOBOD has since withdrawn $600 million and written off the rest, as the season’s cocoa production is considered almost 40% lower than expected, without being able to guarantee the full loan.

    “A request for proposal sent to banks indicates that COCOBOD will borrow up to $1.5 billion next season. It is understood that banks are sizing it and together (with COCOBOD), will decide on an optimal amount,” a COCOBOD source said.

    A second COCOBOD source said they were confident the distribution would go ahead.

    At least one international bank has been in Ghana to inspect cocoa plantations before deciding on the offer, while another is scheduled to visit the country next month, the same source said.

    Production is expected to recover to 810,000 metric tons next season, said the sources, who asked not to be identified because they have not been allowed to speak to the media.

    COCOBOD did not respond to a request for comment.

    Ghana’s cocoa production has been affected by adverse weather, disease and cocoa smuggling. According to COCOBOD, it is expected to be almost 40% below target in the 2023/24 season.

    The sector regulator said it lost around 150,000 tonnes of cocoa beans due to smuggling and illegal gold mining known locally as galamsey in the 2022/23 season.

    He expects even greater losses this season, as the global rise in cocoa prices is an incentive for more smuggling.

    According to COCOBOD, the swollen shoot virus devastated about 590,000 hectares of agricultural land between 2018 and 2024.

    A source said they were confident that Ghana would still meet the target of 810,000 tonnes for next season as the weather is expected to improve and rehabilitated cocoa farms will increase production.

    Ghana Cocoa export revenues fell nearly 50% year-on-year in the first four months of the year, central bank data showed this week.

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