Ghana cocoa buyers say Cocobod financing delays hindering purchases

Licensed cocoa buyers in Ghana said yesterday that week-long delays in the release of financing by industry regulator, Cocobod, was hindering their ability to purchase the beans needed to fill their supply contracts.

Ghana, the world's second biggest cocoa producer, has around 20 active Licensed Buying Companies (LBC), which sign rolling contracts to supply specific amounts to COCOBOD.

Many receive an advance which they repay when the cocoa is delivered under a schedule that includes the buyers’ margin, evacuation cost and a bonus.

COCOBOD raises an annual loan - around $1.8 billion this season - to pay for cocoa purchases.

"January 27 was the last time we got paid an advance by COCOBOD. Since then, we have received no money. It has crippled our operations because it's working capital which is locked up," said one senior official at a cocoa buyer.

Seven buying companies contacted by Reuters said they were facing similar financing crunches due to COCOBOD delays, which they said were the worst in years. All declined to be named for fear of antagonising the regulator, which some said had promised to resume the payments later this month.

A COCOBOD spokesman said he was unaware of the problem.

Two Netherlands-based traders said they were aware of reports of delays but had not seen a decrease in volumes, likely because there were sufficient stocks already at Ghana's two ports to avoid a slowdown.

COCOBOD forecasts production in Ghana of about 800,000 tonnes in the 2016/17 season, down from an earlier forecast of up to 900,000 tonnes.

One senior buyer at another company showed Reuters a contract issued in January worth 3.3 million cedis ($729,000) to buy 389 tonnes of beans. He said he typically would receive COCOBOD pre-financing within six to eight days but 20 days later he was still waiting for the money.

Local companies without financing from international partners have seen their operations paralysed, buyers said.

"For the past six to eight weeks the LBCs have not been getting money ... The farmers are frustrated," said a third buyer.

Another company official said the problem dated to around the time the government of President Nana Akufo-Addo was sworn in on Jan. 7 and replaced most of COCOBOD’S senior leadership.

Ayisi Botwe, secretary of the Licensed Cocoa Buyers Association, said he was not aware of a significant problem with payment delays and suggested that some companies could simply be facing internal financial problems.