Cocoa purchases declared to Ghana's industry regulator Cocobod amounted to around 200,000 tonnes in October, the first month of the 2016/17 season, two senior government sources in the cocoa sector said on Friday. The officials gave no comparative figure from the previous season. However, the pace of the harvest, which opened on October 1 with a 12 percent increase in the farmers' price, was roughly on a par with the estimated output in neighbouring Ivory Coast, the world's leading grower.
"It began well and the bean size is good, but there are indications it is not going to be an early crop. It (will) be a long season," one source said on Friday, adding that purchases for the season's first week reached 60,000 tonnes. Ghana, the world's second largest cocoa producer, is targeting production of 850,000 to 900,000 tonnes of beans this season. It produced 778,043 tonnes in the last, Cocobod said.
The West African nation operates a partially-liberalised cocoa marketing system whereby Cocobod provides revolving seed money to licensed buying companies (LBC) to purchase beans on its behalf. Cocobod secured a $1.8 billion syndicated loan from international banks in September for this season's purchases. However, to access Cocobod financing companies are required to provide guarantees from banks who pledge to reimburse the regulator in the case they default.
A senior Cocobod official told Reuters that many licensed buying companies are struggling to obtain those guarantees. "It's a major problem. The indications are that some of the major buyers are heavily indebted to the banks, so the entire financial sector is not willing to support them," the official said.
Cocoa marketing analyst Kweku Boamah said the banks had been made wary by a debt crisis at Ghana commodities trader Finatrade Group, which led to its cocoa buying unit Akuafo Adamfo defaulting on its Cocobod loans last season. He said that while the impact on purchases has not been felt so far, if the banks continue to withhold the guarantees, the licensed buyers will struggle to pay farmers for beans as production picks up.
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