The Chief Executive Officer (CEO) of the Ghana Cocoa Board (COCOBOD), Dr Stephen K. Opuni, says the board has put in place adequate measures to address the systematic challenges facing cocoa production in the country.
He was speaking at a ceremony where the board signed an agreement with a consortium of 24 banks to raise US$1.8 billion to support cocoa production in the 2016/17 season.
The US$1.8, which is the first tranche of a US$2 billion loan approved by Parliament earlier this year, is expected to help the board to produce between 850,000 to 900,000 tons of the crop in the 2016/17 season.
It will also help fund ongoing activities such as the construction of cocoa roads, free seedling distribution exercise, as well as ensure prompt payment for cocoa purchased by the licensed buying companies (LBCs) from the crop farmers.
Dr Opuni signed on behalf of COCOBOD, while representatives of the participating banks, which were led by eight banks, also signed for their respective institutions.
The loan was oversubscribed by US$640 million.
With the exception of Fidelity Bank, all the participating banks are foreign-based.
Dr Opuni thanked the participating institutions for always reposing confidence in the board and the cocoa sector in general.
He explained that although Ghana’s cocoa sector was confronted with challenges of declining soil fertility, ageing cocoa farmers and over-aged cocoa, the board, together with the government, was making frantic efforts to support the crop farmers to address them.
“We are supporting our cocoa farmers to improve upon the soil fertility of their cocoa farms through the free fertiliser distribution programme and we continue to provide free fungicides and insecticides to our cocoa farmers to spray their farms,” he stated.
Dr Opuni explained that the board’s production target for the 2015/16 season was adversely affected by severe and prolonged dry weather conditions, which lasted from December 2015 to March 2016.
To mitigate the effect, the CEO said COCOBOD was collaborating with the Forestry Commission and the Ministry of Lands and Natural Resources to promote agro-forestry systems, while educating farmers to engage in environmentally friendly practices on their farms.
He expressed confidence that these measures would help the board to achieve its 2016/17 target, which it pegged at 850,000 to 900,000 tons.
Ghana is currently the second producer of the crop, after Cote d’Ivoire.
At a news conference in Accra yesterday, the Public Affairs Manager of the board, Mr Noah Amenyah, said this year’s loan attracted an interest rate of 0.468 per cent compared to last year’s which was 0.19 per cent.
He explained that the rise in the rate, relative to last year’s loan, was due to a corresponding increase in the London Interbank Interest Rate (LIBOR).
The LIBOR is a benchmark rate that most financial institutions in the world use to reference their rates.
Unlike last year, when it was 0.186 in August and September, when COCOBOD was negotiating for the same US$2 billion, the LIBOR was 0.446 per cent the same period this year when the board commenced negotiations for the same amount of money.
The rise in LIBOR was largely due to Britain’s successful vote to leave the European Union (EU) in July, this year, which created some anxiety in the global financial market and forced rates to rise.
Notwithstanding the increment in the rate on this year’s cocoa loan, Mr Amenyah said COCOBOD had put in place measures that would ensure that it completed repayment within the stipulated time frame.