Ghana’s regulators in biggest cocoa harvest debt sales

*Ghana’s 2020-21 cocoa production has exceeded target, stretching the $1.3 billion syndicated loan the industry regulators raised at the beginning of the season in October 2020

Emmanuel Akosile | ConsumerConnect

Ghana’s biggest cocoa harvest in a decade is spurring record domestic borrowing by the industry regulator of the world’s No. 2 cocoa producer.

The West African country’s Cocoa Board has sold 11.7 billion Cedis ($2 billion) of six-month bills between January and May, the most in the five-month period since at least 2011, agency report said.

Cocoa pods

The Ghana Cocoa Board is a Ghanaian government-controlled institution that fixes the buying price for cocoa in Ghana.

The Board ensures that farmers are protected from the volatile prices on the world market through the price-fixing.

The regulator, which is the only buyer of the chocolate ingredient in Ghana, typically borrows from overseas banks, but the 2020-21 production has exceeded target, stretching the $1.3 billion syndicated loan that was raised at the beginning of the season in October 2020.

It increased bill sales to help refinance maturing obligations, said Ray Ankrah, the head of finance and administration at the agency.

Record Borrowing

Ghana Cocoa Board’s domestic borrowing jumps to at least 10-year high, report stated.

Farmers harvested 965,493 metric tonnes by June 3, compared with a target of 900,000 tonnes for the whole crop year that ends in September.

This places Ghana easily within the reach of the 1 million-tonne mark, which was last attained in 2010-11.

Yields on the bills are falling, as traders speculate that the regulator will make more income from the bumper crop.

The 1.3 billion Cedis, 182-day securities issued at 17.65% on May 18, are currently trading at 15.65%.

Even though cocoa futures have dropped over this year, average prices are at still 5% higher at $2,475 a ton from a year earlier.

The regulator is also planning to raise $1.5 billion through syndicated loans for the season that begins in October, Ankrah said.

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