Ghana is seeking a $500 million loan from leading cocoa traders to sustain its cocoa industry as it faces delays in securing traditional financing arrangements.
According to sources from Citi Business News, the Ghana Cocoa Board (COCOBOD) is in talks with major cocoa traders, including Olam Group and Barry Callebaut, to obtain part of the $1.5 billion needed to finance operations ahead of the upcoming cocoa season in October.
This $500 million loan is being pursued as a temporary solution while COCOBOD struggles to finalize its annual syndicated loan, a process currently stalled by concerns over crop yields.
This marks the second year in a row that Ghana, the world’s second-largest cocoa producer, has had to depend on traders for interim funding.
The loan is critical for COCOBOD to purchase cocoa beans from farmers, pay for essential supplies like fertilizers, chemicals, and seedlings, and help stabilize the country’s currency.
However, lenders have shown reluctance due to a sharp decline in cocoa production. Ghana’s cocoa output is projected to fall to just over 500,000 tons this year, a significant drop from the usual 800,000 tons.
The decrease is largely due to unfavorable weather conditions, disease outbreaks, and fertilizer shortages.
In response, COCOBOD plans to start the cocoa season a month earlier in September to combat smuggling and implement a new tracking system.
This tracking system aims to ensure that all cocoa beans are traceable from farm to warehouse, aligning with the European Union’s deforestation regulations.
Efforts to obtain comments from the cocoa traders and COCOBOD about the ongoing negotiations have been unsuccessful so far.
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