COCOBOD to revoke four buyers’ licences

The Ghana Cocoa Board (COCOBOD) says it will withdraw the licences of four Licenced Buying Companies (LBCs) for failing to purchase the minimum 2,000 tonnes of cocoa beans for the past three seasons.

The four companies are Duapa Buyers Company Limited, Ghana Co-operative Marketing Association, Farmers Alliance Company Limited and Abapa Golden Limited, according to a COCOBOD report titled “Performance Evaluation of Licensed Buying Companies - 2010/11 Main Crop Season”, seen by the Business and Financial Times.

Under the internal marketing of cocoa regulations in Ghana, LBCs are required to purchase a minimum of 2,000 tonnes of cocoa -- failure by an LBC to meet the requirement after three seasons mandates the industry regulator COCOBOD to withdraw its licence.

The report said Universal Co-operative Limited, Blossom Exports Limited, Marpie Enterprise Limited, Aboafo Buying Company Limited, Evadox Company Limited, Chartwell Company Limited, Dio Jean Company Limited and Allied Commodities Limited also failed to achieve the minimum 2,000 tonnes in two successive seasons.

But in accordance with the regulations, the report said, they should be cautioned to improve upon their performance to the standard requirement or risk losing their operating license after three consecutive seasons of underperformance.

The report, which was prepared by the Research, Monitoring & Evaluation Department of COCOBOD, noted that the performance of some of the LBCs calls for a review of the licencing policy for the internal marketing of cocoa.

“The call has become necessary due to the failure of a large number of LBCs to purchase more than 2,000 tonnes consistently over the years,” the report added.

The report disclosed that COCOBOD may consider the institution of a reward system for LBC’s which perform satisfactorily to serve as an additional channel of motivation to encourage others to strive for excellence.

Currently, there are 27 LBCs involved in the internal marketing of cocoa. The Produce Buying Company (PBC) is the largest buyer while Akuafo Adanfo, Armajaro Ghana Limited and Olam occupy the second, third and fourth places respectively.

Meanwhile, COCOBOD said it will take two weeks to bring the congestion at the Apowa Commodity Village near Takoradi to normalcy.

“Work is progressing and we are determined to bring the situation to normalcy,” Noah Amenyah, COCOBOD’s Public Affairs Manager, told B&FT in an interview.

“We are currently re-routing about 700 – 1000 tonnes of cocoa beans from Takoradi to Tema and Kaasi take-over centres to reduce the congestion,” said Amenyah.

Currently, there are about 250 articulated trucks carrying cocoa beans held up at the Apowa Commodity Village waiting to be offloaded.

The congestion at the Apowa Commodity Village is the result of a recent labour impasse between cocoa carriers and labour companies contracted by the Cocoa Marketing Company (CMC) over pay and other working conditions, and a dispute over shore-handling fees between the Ghana Ports and Habours Authority (GPHA) and shipping lines.

“We met with the labour companies and asked them to resolve their labour issues and provide us with adequate labour. We are also encouraging new companies to provide additional labour,” he disclosed.

“We have also put in place some internal offloading arrangements for the weekends to help reduce the waiting times of the LBCs at the port,” he added.

On the shipping lines and GPHA dispute, he said: “A temporary deal has been reached and shipping lines have restarted export operations since late December 2011.”

The dispute slashed Ghana's cocoa exports to 33,000 tonnes in November from 90,000 tonnes in October 2011.

Ghana, the second-largest grower of cocoa, is aiming to produce 850,000 – 900,000 tonnes in the ongoing 2011/12 season after hitting a record of over 1 million tonnes last season thanks to good weather and increased fertiliser application, among others.

According to COCOBOD’s figures, purchases hit 518,531 tonnes by December 22 in the ongoing season -- cocoa purchases are running 9 percent over last year.

But COCOBOD is worried about falling cocoa prices in the world market. Cocoa prices dropped by 36 percent last year after production exceeded demand by 341,000 tonnes for the 2010/11 season, according to the International Cocoa Organisation (ICO). Last week Friday, cocoa on the futures market was purchased at US$2,326.00 per tonne.

“We did a forecast of about US$3,000 a tonne, but currently it's now far lower than that and we are worried it could continue to plummet,” COCOBOD Chief Executive, Tony Fofie, told reporters in Accra on December 21.

In answer to a question about hedging, Fofie said COCOBOD has no plans to hedge its cocoa exports, adding that: “That is a policy decision for the government to take, but for now we don't have any such plan.”