COCOBOD shifts strategy — Prioritises spot sales for new season

In an unprecedented move, the Ghana Cocoa Board (COCOBOD) plans to prioritise spot sales over forward contracts for the new cocoa season. 

This strategic shift aims to take advantage of potential price surges in the international cocoa market, following a missed opportunity last season when prices soared to $12,000 per tonne. 

Cocoa prices on the spot market soared from US$2000 per tonne in March 2023 to a staggering US$12,000 in February 2024, before dropping to US$7960 by September 2024.

The country, however, did not benefit much from this price boom because the cocoa regulator had already locked up about 70% of the country’s cocoa beans on forward sales contracts ranging between US$2600 to US$2800 per tonne.

However, in the new cocoa season which commenced on September 11, COCOBOD intends to flip this and do more spot sales than forward sales.

Responding to a question from the Graphic Business at the announcement of the new farm gate cocoa price, the Minister of Food and Agriculture, Bryan Acheampong, said COCOBOD was yet to determine what percentage of the cocoa beans would be sold on the spot.

He said the volatility of the market would inform the day-to-day decisions of the management of COCOBOD on how they trade cocoa for the country.

“The movement is not such that you can be fixated on one activity to determine the 12 months that you intend to trade. And that is why we have extremely competent management at the board, overseeing Cocoa Board to ensure that as and when there is movement of price, decisions are made,” he explained.

COCOBOD has money 

With COCOBOD yet to raise its annual syndicated loan, many have expressed concerns over how it intends to buy the cocoa beans from the farmers.

It will also be recalled that the Management of COCOBOD earlier announced that it was breaking away from the 32-year cycle and would, therefore, not be raising money from the international capital market this year.

This was, however, clarified by the Minister of Finance who explained that COCOBOD would be raising about $600 million from the syndication to complement its own resources to finance the new season.

But with the syndication yet to come in, and the new season already started, market watchers have raised issues over how farmers would receive prompt payments for their cocoa beans.

“I'm not too sure why you say that COCOBOD has no money. It is a wrong impression. It should never be put out there. COCOBOD is well positioned to buy crops from its farmers and trade the same. 

“Nowhere has the government reported or COCOBOD mentioned that it has no money to buy cocoa,” he said.

Production target 

On the production target, the Minister said COCOBOD had to scale down its projection to 650,000 tonnes for the new season due to bad weather conditions.

“We all know that we are experiencing some dry spells in the country. Last year, it was quite unfortunate we were hit by El Nino. The farmers here will attest to it.

“This year, we are experiencing a dry spell, which in itself we are managing. We are praying that COCOBOD will escape the effects of this. So we have set our target square at about 650,000 metric tonnes,” he said.

He said it was the firm belief of the ministry that with the implementation of COCOBOD’s agronomic practices, it would be able to increase production beyond the 650,000 target.

“This is consistent with what we achieved in 2021, 2022 and 2023. We are hoping that, notwithstanding the El Nino, we will bounce back stronger,” he said.

Cocoa price increase 

The Producer Price Review Committee (PPRC) on cocoa increased the farm gate price of cocoa by 129% from GH¢20,928.00 per tonne at the opening of the 2023/2024 season to GH¢48,000.00 per tonne for the new season. The new price translated into GH¢3000 per 64kg bag.

Mr Acheampong, who announced the new price, said the severe highs and lows of prices on the international market were indicative of a market and sector that requires careful analysis before making any pricing decisions.  

He said the government was committed to building a robust, resilient and sustainable cocoa sector for present and future generations. 

“This appreciable increment in the producer price of cocoa signifies the government’s commitment to improve the sector and the livelihoods of the Ghanaian cocoa farmer,” he said.