.jpg "A revamped CPC will help increase domestic processing and consumption of cocoa.")
Revamped CPC to drive cocoa consumption agenda
The Ghana Cocoa Board (COCOBOD) has given 1,000 tons of cocoa beans to debt-ridden cocoa grinder, the Cocoa Processing Company (CPC) to start production on its own after months of tolling for its counterparts.
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The beans, which were given to the company on credit, represent one of many such gestures from the board aimed at revamping the CPC to be able to drive the government’s cocoa consumption agenda.
The Chief Executive Officer (CEO), Mr Joseph Boahen Aidoo, said his outfit intended to give the processor some 30,000 tons this year, with the expectation that it would lodge earnings from the processed beans into an escrow account for COCOBOD and use the margins to pay off its decade-old debts.
Once consistent, Mr Aidoo said CPC could come back to its glory days to help push the government’s agenda of increasing domestic processing and consumption of cocoa. The government has an agenda of processing some 50 per cent of the country’s premium cocoa bean locally to help generate more jobs, while raising earnings from the sector.
With COCOBOD holding about 58 per cent stake in the CPC, Mr Aidoo said it would be economical to empower the company to be able to achieve the government’s agenda.
The campaign to increase local consumption of cocoa is expected to start later this year, with the First Lady, Rebecca Akufo-Addo, being a cocoa ambassador.
Given that increased cocoa consumption required easy availability of the produce, the CEO said getting the CPC back on its feet was paramount to the success of the campaign.
CPC’s challenges
Established in 1965 initially as a public entity, the CPC's vision was to become “a first class food factory of international repute” that will major in the processing of the country’s premium cocoa beans into finished and semi-finished products for the local and international markets.
For over three decades, that vision was on course until the early 2000s when high demand for processed cocoa in the international market lured the company into taking a decision it would forever regret.
After realising a steady demand for its products vis-a-vis a limited installed capacity, CPC’s management, around 2002 secured three credit facilities – £22 million, US$22 million and GH¢1.6 million – from different lenders at different rates to help rehabilitate factories and expand to meet increasing demand.
The five-year programme began in 2003 and included the upgrading of the capacity of the company’s maiden factory from 25,000 tons to 34,500 tons and the installation of a new plant to process 30,000 tons of the beans into liquor.
This more than doubled the CPC's capacity from 25,000 to 64,500 tons in 2008, then making it the biggest processor in the country at the time.
But as the pomp and ceremony that greeted the expansions subsided, remnants of the loans started showing, buoyed by the 2008 financial crisis which dampened growth in all sectors, including the cocoa sector.
The situation was compounded by the depreciation of the cedi to its trading partners, especially the US dollar and the euro, which hugely exposed the company to foreign exchange losses.
In 2008, the cedi lost about 30 per cent of its value to the US dollar and seven per cent to the Euro, resulting in an increase in the cedi value of the two loans.
The impact
CPC's predicament was compounded by its inability to pay for beans to process in the upgraded facilities.
Because the company was using a lot of its earnings to service the two loans, it was unable to buy enough beans to process. The few it bought were mostly on credit, another arrangement that will return to hurt its finances.
Thus, although the company had toiled to install state-of-the-art plants, it was starved of beans to process due to lack of funds.
The result was a reduction in revenues and the dwindling of its fortunes, which finally translated into a GH¢16.95 million loss in 2009.
The years that followed will now see the CPC move from a profitable venture every investor yearned to invest in to a loss making business that investors will scramble to sell their stakes.
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For 10 years running, the company has not paid dividend as its losses increased from the GH¢16.95 million in 2009 to US$16.28 million (GH¢57.6 million using an exchange of US$1 to GH¢3.54) in 2014.
Now, that debt has worsened, prompting the unionised staff to request for a delisting of the company to make it possible for the government to rescue them financially.
On the issue of delisting the company to bring in government funding, COCOBOD’s CEO said such a decision would require the approval of entire shareholders.
He was, however, confident that measures put in place by the board and the management would help bring the company back to its feet.
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