Business News of 2014-08-07

‘Increase cocoa price to halt smuggling’

The Managing Director of Kuapa Kokoo Limited, an association of cocoa farmers, Mr Emmanuel Kwabena Arthur, has appealed to the government, through the Ghana Cocoa Board (COCOBOD), to consider increasing the producer price of cocoa to prevent the smuggling of the product to neighbouring Cote d’Ivoire.
He said because the producer price of the commodity in Cote d’Ivoire was higher, many cocoa farmers, with the tacit support of some saboteurs, were smuggling large chunks of the nation’s cocoa across the borders.
Mr Arthur made the call at the annual general meeting and 20th anniversary celebration of the formation of Kuapa Kooko in Kumasi.
For the 2012/2013 crop season, the 90,000-member association produced 771,937 bags of cocoa, which translates into 42,246 metric tonnes of the merchandise and represents about 5.7 per cent of the total amount of cocoa produced in the country.
Reuters
In May this year, Reuters News Agency reported that because of Ghana's falling currency, as much as 100,000 tonnes of cocoa had been smuggled into Cote d’Ivoire since October last year.
Cocoa smuggling between the world's two leading cocoa producers was common. However, over the past decade, the trend had centred on the smuggling of Ivorian beans into Ghana.
Reuters claimed that so far this year, Ghana's currency, the cedi, which the government is struggling to stabilise, has fallen nearly 23 per cent against the dollar, compared to Cote d’Ivoire’s euro-pegged CFA franc which has remained stable over the period and thus makes the country's official producer price of about 24 per cent higher and more attractive than Ghana's.
Producer Price
Ghana’s low producer price, coupled with operational challenges such as inadequate seed fund for the purchase of cocoa by the COCOBOD, congestion at the takeover centres leading to defects on the beans, is affecting the profits of cocoa farmers.
“We entreat the Ghana Cocoa Board to resolve the perennial problems at the takeover centres to ensure smooth operations during the coming season,” Mr Arthur stated.
He further called on COCOBOD to review the margins paid to Licensed Buying Companies, which have remained the same over the last four years, to make them reflect the current economic conditions in the country.
Finances
Kuapa Kooko made a turnover of GH¢183.7 million in the 2013/2014 crop season and a gross profit of GH¢22.6 million. Also during the period, the association made profit before financial cost of about GH¢6.8 million. Subsequently, the association paid GH¢6.5 million as interest on loans and other financial cost, dwindling its net profit to GH¢203,561.
“It would be seen from the above that financial costs take all of our profits; money that would have gone to farmers to improve their livelihoods. The story is not going to be different this year, as the banks are quoting between 27 per cent and 30 per cent as interest rates,” he added.
Mr Arthur called on policymakers to make strenuous efforts so as to reduce interest rates “to make farmers benefit fully from their toil.”
Divine Chocolate
Ms Sophi Tranchell, the Managing Director of Divine Chocolate Limited, a chocolate manufacturing company in the UK with a subsidiary in US, commended the farmers and the managers of the association for their hard work.
She said the farmers’ decision to set up their own chocolate company in the lucrative UK chocolate market in 1997 had helped to make Kuapa Kooko a leader in the world cocoa industry.
“Kuapa Kooko is a reflection of the vision that, given fair opportunity, smallholder farmers can directly improve their lives and communities and become captains of a sustainable cocoa farming business,” she added.
Source: graphic.com
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