PBC to dialogue with Cocoa Industry Regulators

Accra, March 17, GNA - Produce Buying Company (PBC) says it would continue to dialogue with the Ghana Cocoa Board and the Ministry of Finance to remove some of the bottlenecks that had plagued the Cocoa Industry and to seek compensation if the external problems were not resolved in good time.

Board Chairman of PBC, Nana Timothy Aye Kusi told the Annual General Meeting of shareholders that a review of the operations of the Company showed that huge stock hold up had increased the Company's finance cost beyond tolerable limits.

Besides, initial rejections of stocks up-country and the ports as a result of the confusion of categorization and grading also led to huge produce losses and shortages.

In addition, the reduction in the Free on Board price from 1,650 dollars to 1,440, dollars; a decline in buyer's take over margins from 1,105,000 cedis to 963,000 cedis per tonne; increase in operating costs triggered by fuel price increases and the purple bean problem in the 2004/05 Main Crop Season had all combined to impact negatively on the performance of the industry.

"In fact, by the 6th week of the 2004/05 main crop season, only 15 per cent of cocoa purchased by your company had been sealed by the Quality Control Division of Cocobod, as against 53 per cent for the same period last year," Nana Kusi said.

He explained that the low grading and sealing position meant that the Company had to lock its working capital into stocks while interest on the funds continued to accumulate.

Consequently, the unfavourable operational environment put a severe strain on the Company's finances forcing it to record net operational loss of 31 billion cedis during the year, he said. The cumulative effects of the adverse operational performance resulted in the reduction of Shareholder funds by 37 per cent from 85 billion cedis to 54 billion cedis.

Nana Kusi said these findings had been forwarded to the Ghana Cocoa Board and the Ministry of Finance and Economic Planning for possible redress while administrative and legal actions had been taken against the Company's staff whose actions or inactions aggravated the problems and were found to be culpable.

However, he said, the Company was able in the midst of the difficulties to capture additional six per cent of the market share of the internal market from 33 per cent to 39 per cent. Volume purchase was low at 225,358 tonnes as against 244,597 tonnes recorded in the 2003/04 season.

Nana Kusi said the Company would adopt strategies to increase revenues to put it back on the path of sustained profitability. One way to achieving this is to increase freight earnings from secondary evacuation by increasing the share of cocoa evacuated by the Company's articulated trucks.

Mr Emmanuel Owusu Boakye, Managing Director of PBC, said the operational challenges encountered by the Cocoa Industry during the year required serious evaluation of current relationship between Licensed Buying Companies and Cocobod and its divisions that regulated the cocoa industry.

He said the Company would continue to adopt aggressive marketing posture by expanding field operations in major cocoa growing areas to combat the intense competition in the internal cocoa market in the ensuing years. No dividend was declared.

Shareholders urged the Management to deal with the bureaucracy that had plagued the industry, leading to the stockpiling of cocoa at the ports so that the Company would make profit and pay dividend. 17 March 06