The Ghanaian government is set to release a turnaround strategy for the Ghana Cocoa Board (COCOBOD) by the end of July 2024, according to a recent IMF report.
This strategy aims to enhance COCOBOD’s financial stability through improved financial oversight and adjustments in the producer pricing mechanism to ensure fair revenue distribution and cover operational costs.
It will also involve reducing costs by streamlining COCOBOD’s departments and subsidiaries, and phasing out quasi-fiscal activities such as funding for cocoa roads and fertilizer programs.
Despite improvements in COCOBOD’s financial health in 2023, 2024 has been challenging.
A notable decline in cocoa production and a significant rise in spot market prices led to a 58% increase in the farmgate price of cocoa in April 2024 to curb smuggling and support the local market.
To manage cash flow, COCOBOD plans to increase sales at higher spot prices and implement further cost-saving measures.
The IMF praised the Ministry of Finance for its improved oversight through the establishment of a cocoa desk to monitor COCOBOD’s finances.
The government has also sought IMF technical assistance to develop a robust oversight strategy for state-owned enterprises.
In February 2024, COCOBOD secured a $200 million loan from the World Bank to restore cocoa farms affected by disease.
The cocoa swollen shoot virus, aging plantations, illegal mining, and smuggling have drastically reduced Ghana’s cocoa production, which fell to 600,000 metric tons last year from a peak of 1.048 million tons in the 2020/21 season.
“Faced with a significant shortfall in production and a large increase in spot market prices, and following a similar decision in Ivory Coast, the authorities increased the farmgate price of cocoa by 58.0% in April 2024 to prevent smuggling and support Ghana’s cocoa market.
To avoid this decision leading to a cashflow deficit, COCOBOD intends to increase the proportion of sales at the current high spot prices, while seeking additional spending rationalization”, the Fund said in its Ghana Second Review under the Extended Credit Facility.
tigpost.co
