27 Apr

From Defaults to Poor Data, Cocoa Audit Shows Top Grower’s Woes

Ivory Coast’s cocoa regulator failed to prevent a crisis that sent prices plummeting last season, according to an audit of the world’s top producer by KPMG LLP.

Offering a rare glimpse into the workings of an opaque industry, KPMG shows how flaws in the West African nation’s sales system had a “catalyst effect” on the industry’s woes, according to a copy of the audit commissioned by the government and obtained by Bloomberg.

The crisis cost the country at least 185 billion CFA Francs ($333 million) in lost income, KPMG said. While reforms of the sector in 2012 were supposed to protect cocoa farmers from global swings, the last annual season that ended in September showed producers remained vulnerable.

Prices started tumbling amid forecasts for an oversupply, triggering a wave of defaults by local exporters which couldn’t fulfil their contracts because they had bet on higher prices.

A slow response from Ivory Coast deepened the rout and resulted in farmer pay being cut by more than a third.

KPMG and Yves Brahima Kone, head of the regulator known as Le Conseil du Cafe-Cacao, declined to comment.

These are the report’s main findings and recommendations:

1. Defaults

After prices reached a six-year high in July 2016, local shippers who speculated on further gains were caught wrong-footed.

The audit showed 32 exporters defaulted on 222,302 metric tons of cocoa, about a fifth of sales usually made ahead of the start of the season. Smaller exporters from groups known as Pmex and Coopex accounted for 68 percent of the unfulfilled contracts.

The defaults forced Ivory Coast to reauction beans, putting further pressure on prices. The CCC allowed some defaulting companies to continue making purchases, raising the risk for the current season, KPMG said.

The biggest defaulters during last season were Nocoacy with contracts for 35,975 tons, Saf Cacao with 15,000 tons and 2CICS SA with 14,900 tons, according to the report. Saf Cacao had also defaulted on 7,425 tons in the 2015-16 harvest, it said.

To read the full article, click here.

15 Mar

Ghana Cocoa Board Former CEO Charged for Causing Losses to State

The former chief executive officer of Ghana Cocoa Board, Stephen Opuni, has been charged for causing financial losses to the state during his tenure as head of the regulator, according to a justice ministry official.

The charges against Opuni, who was fired by President Nana Akufo-Addo in January 2017, were laid Wednesday at the High Court in Accra, the capital, Joseph Addo, a spokesman for the office of the attorney-general and the justice ministry, said by phone.

Several calls for comment to the mobile phone of Opuni didn’t go through.

Opuni allegedly agreed deals of 217 million cedis ($50 million) for the delivery of fertilizers from 2014 to 2016 with suppliers which he knew wouldn’t have been able to fulfill their contracts, Accra-based broadcaster Joy FM reported on its website, citing court papers that were signed by Chief State Attorney Evelyn Keelson on March 12.

Opuni also allegedly took an illicit payment of 25,000 cedis from one of the suppliers in October 2014, Joy FM reported.

Justice authorities brought the charges “because they believed there were infractions in the award of contracts during Opuni’s tenure,” Fiifi Boafo, a special assistant to current Ghana Cocoa Board CEO Joseph Boahen Aidoo, said in a broadcast on Citi FM.

The charges follow as the year-old administration of Akufo-Addo’s New Patriotic Party pledged to crack down on graft and hold public officials to account for the management of state funds during their tenure.

Opuni was appointed in 2013 by former President John Mahama of the National Democratic Congress.

The NDC said Wednesday that the charges against Opuni were made up, according to Joy FM. Ghana is the world’s biggest cocoa producer after neighboring Ivory Coast.

Source: https://www.bloomberg.com/news/articles/2018-03-14/ghana-cocoa-board-former-ceo-charged-for-causing-losses-to-state

28 Feb

Ivory Coast Lost 125,000 Tons of Cocoa to Smuggling

Ivory Coast lost an estimated 125,000 metric tons of cocoa this season through the smuggling of beans to neighbouring countries where farmers and traders are paid better prices, according to two people familiar with the matter.

The industry regulator of the world’s biggest cocoa producer estimates that the country lost as much as 100,000 tons through its eastern border with Ghana and another 25,000 tons through the western boundary with Liberia and Guinea, said one of the people, who asked not to be identified because the information isn’t public.

One of the biggest cocoa buyers in the country made a similar forecast, said a second person.

The estimates were calculated by subtracting the border regions’ port deliveries from the average of previous harvests.

The total is the equivalent of 9.2 percent of arrivals since the beginning of the season in October through Feb. 25, according to government data.

Mariam Dagnogo, a spokeswoman for Le Conseil du Cafe-Cacao, the regulator, didn’t answer calls seeking comment.

Ivory Coast is struggling to contain cocoa smuggling this season after the country lowered the minimum price for farmers by more than a third to the equivalent of $1,314 per ton as international contract prices declined.

The change opened an unusual payment gap with Ghana, the second largest cocoa producer, which left its minimum producer price unchanged at the equivalent of $1,700 per ton.

The government and regulator will review border security ahead of the smaller
of the two annual harvests which begin in April, said one of the people.

Source: https://www.bloomberg.com/news/articles/2018-02-27/ivory-coast-is-said-to-lose-125-000-tons-of-cocoa-to-smuggling

27 Feb

Ivory Coast Cocoa Farmers Get Relief as Rains Return Early

Cocoa farmers in Ivory Coast, the world’s top producer, got some welcome relief in the past week with higher-than-normal rainfall across the main growing regions.

It rained heavily on Wednesday night for more than six hours, said Robert Glaou, a farmer in the western town of Bangolo. Harmattan conditions have ended, he said, referring to winds from the Sahara that bring dry weather and coolness to West Africa from December to February.

“The weather is currently very good,” said Narcisse Konan, the head of a cooperative in southwest Ivory Coast. “There were small pods on the trees and we needed some rain to make them stronger.” The Harmattan overall was very mild this year, he said.

Ivory Coast is nearing the end of its main crop, the larger of two cocoa harvests that runs from October to March. The rain will help development of the smaller mid-crop, although wet weather tends to slow harvesting.

Satellite imagery from the U.S. Climate Prediction Center for Feb. 18 to 24 suggests well-above-average rainfall across Ivory Coast, as well as the biggest-producing regions of neighboring Ghana, the No. 2 grower.

“It has been raining in the area for several days,” said Jeannot Assi, a farmer in the southern town of Alepe, in Ivory Coast. “We are now seeing flowers and small pods” on the trees.

There has also been heavy rain in Tiebissou, in the center of Ivory Coast, that will allow the trees to bloom, said farmer Moussa Kouassi. Growers have begun maintenance work for the mid-crop harvest, he said.

While the weather has improved, harvesting volumes have decreased as the main crop peters out and farmers in the west and southwest said they’ve seen bean size and quality deteriorate.

“The beans are small,” said Vincent Zadi, a farmer in Grand Zatry, in the southwest. More rains are needed to help the cocoa trees to bloom and produce small pods, he said.

To read the full article, click here.

23 Feb

Ghana Risks the Anger of 800,000 Cocoa Farmers

The government of President Nana Akufo-Addo in Ghana will struggle to sidestep one of its most difficult decisions since coming to power a year ago: telling a crucial constituency to accept a pay cut.

The New Patriotic Party-led government has little choice but to end subsidies for its 800,000 farmers that will likely cost almost $450 million this season.

Ghana Cocoa Board, the industry regulator in the world’s second-biggest producer, is running out of cash with few options for funding left other than to sell short-term debt to local investors at rates as high as 22 percent.

Justifying a decision to end the support will be tricky. The NPP swept to power in the December 2016 polls after pledging to invest in farms and increase prices.

Justifying a decision to end the support will be tricky. The NPP swept to power in the December 2016 polls after pledging to invest in farms and increase prices.

Farmers are unimpressed with the prospect of the government going back on its promises even though international prices have slumped by more than a third since the middle of 2016.

“If the government cannot afford to pay for its own loose talking, then it must borrow,” said Michael Acheampong, 37, a cocoa farmer in Kwabeng, about 120 kilometers (75 miles) northwest of the capital, Accra. “To announce a cut after promising to help us is a sacrilegious crime. We will not accept that.”

Ghana has little room to support prices even if rising output from new oil fields are supporting an economic revival.

While the World Bank forecasts that the economy will expand by 8.3 percent in 2018, the fastest rate in Africa, the country remains bound by conditions for disciplined spending that are attached to an almost $1 billion bailout from the International Monetary Fund, agreed to in April 2015.

Ghana Cocoa Board is losing the equivalent of about $600 for every metric ton of the 850,000 tons that it plans to purchase this season until September, the regulator said earlier this month.

To read the full article, click here.

09 Jan

Côte d’Ivoire: Africa’s fastest growing economy’s bittersweet year

This April, cocoa farmers in Côte d’Ivoire awoke to find their crops had lost over a third of their value overnight. The government of the world’s largest cocoa producer had slashed the price it guaranteed farmers by 36%.

Cocoa producers would now be paid a price of around 700,000 CFA Francs ($1,250) per tonne. The Ivorian government said it would maintain this reduced level for the April-September harvest, but later extended the measure to March 2018.

The administration felt it had to take this drastic measure given the difficult prevailing circumstances. Cocoa has long been the cornerstone of Côte d’Ivoire’s economy – accounting for around a fifth of its exports – and low prices due to global oversupply have hit the nation hard.

In April, the government was forced cut its annual budget by 10%. In May, it announced a loss of $1.1 billion in export earnings. And despite lowering prices, its stabilisation fund had diminished by 300 billion CFA Francs ($54 million) as of this October.

Lowering prices paid to farmers was a way to help Côte d’Ivoire keep its head above water. But the measure was not without controversy. According to cocoa farmer spokesperson Bile Bile, the price cut has had an “extremely negative impact on the lives of farmers”. Moreover, the contrasting approach taken by Ghana added further complications.

Across the border, President Nana Akufo-Addo, who came to power in January, had promised farmers a fair price as part of his election campaign. Trying to honour this pledge, he declared that Ghana, the world’s second biggest cocoa producer, will retain its farmgate price of 7,600 cedis ($1,710) per tonne.

A galaxy apart

This has meant that as of April, it has been around $500 per tonne more lucrative to sell cocoa beans in Ghana than Côte d’Ivoire. Levels of cross-border smuggling have surged.

In June, exporters estimated that 80,000 tonnes of cocoa beans had been smuggled into Ghana since the price drop. Côte d’Ivoire’s cocoa regulator, Le Conseil du Cafe-Cacao (CCC), predicted a fifth of its harvest could be lost to Ghana next season if the price discrepancy continued.

To read the full article, click here.

27 Dec

Mild Desert Winds Spell Good News for Cocoa Crop in Top Producer

A record crop in biggest producer Ivory Coast helped push the cocoa market into a surplus in the 2016-17 season. Prices tumbled and are headed for a second annual decline.

With the 2017-18 season now well underway, all eyes are on the main crop, the larger of two yearly harvests that runs from October through March. Now is a crucial time as the harvest’s at its peak. The Harmattan, dry desert winds from the Sahara, usually blow from December to February and can have a big impact on crops in Ivory Coast and neighbouring Ghana.

Regulator:

Ivory Coast’s cocoa regulator, Le Conseil du Cafe Cacao, has increased its forecast for the 2017-18 main crop harvest to 1.4 million to 1.45 million tons from a previous 1.35 million tons, a person familiar with the matter said last week.

Good rains in the past few months mean that production will probably be higher than anticipated for the second part of the main crop, starting in January, said the person, who asked not to be identified because the projection hasn’t been made public. The forecast assumes that the Harmattan remains mild and doesn’t damage cocoa pods.

Farmers:

After heavy rains in October and November, the Harmattan is now underway in most of the cocoa-growing regions. But it’s been mild so far and it’s often mixed with light rains, said Joseph Gueu, a farmer near Danane in the west of the country. That’s unusual for this time of year. Output has been good so far and young pods are growing well, he said.

Not everyone is so positive though. Too much rain has resulted in brown rot on many pods and reduced production said Alassane Sogodogo, who manages a cooperative near the Liberian border. The rain also damaged roads in the area, making it difficult to send cocoa to the port. The weather has since improved, he said.

To read the full article, click here. 

24 Nov

Global Chocolate Binge Has Olam Predicting Smaller Cocoa Surplus

The world just can’t get enough chocolate.

With “tremendous” demand in emerging markets looking set to continue this season, the world’s third-largest cocoa processor is projecting a sharply smaller global surplus. Excess cocoa supplies that reached a record last season will probably drop to about 50,000 metric tons, said Gerry Manley, head of cocoa at Olam International Ltd.

Demand has picked up in Asia particularly, where countries including the Philippines, Indonesia, India and China are consuming more cocoa powder used in products like cookies and ice-cream, Manley said. And while West African growers may reap a second year of bumper crops, top producer Ivory Coast is unlikely to repeat last season’s record harvest.

“We are very positive on demand,” Manley said in an interview at the company’s London offices Thursday. “We are seeing good demand for cocoa powder across the world, but mainly emerging markets are in a leading position there.”

Benchmark cocoa futures traded in London tumbled 23 percent last year, the biggest decline since 2011, as output climbed to a record in Ivory Coast, while Ghana, the No. 2 grower, also reaped a big crop. The large African harvests helped push the global surplus to 371,000 tons, according to estimates from the Abidjan-based International Cocoa Organisation.

This season, global cocoa processing will probably rise by more than 3 percent, Manley said, adding that the forecast is conservative. Processing exceeded 5 percent growth in 2016-17. About 8,000 new products were launched in the confectionery market last year, Manley said.

Lower costs are boosting demand, with the global chocolate confectionery market expanding 2.3 percent in the three months to June and 2.2 percent the following quarter, the world’s top cocoa processor Barry Callebaut AG said earlier this month, citing data from analytics firm Nielsen. The rebound came after at least six consecutive quarters of contractions.

Underestimating Growth

Changing consumer habits mean some traders may be underestimating growth. Trends including online shopping as well as the rise of artisan shops and bakeries are often missed by traditional data sources, Manley said.

Global cocoa powder demand is forecast to grow at 5 percent and Olam is looking to capitalize on that. The Singapore-based company is investing to increase its capacity to mill cocoa cake into powder in Asia and is also planning a new milling facility just outside Chicago, Manley said. The factory should be commissioned later this month.

Demand for cocoa butter and cocoa liquor, used to make chocolate bars, is also growing and the market is tight despite last season’s record surplus, Manley said. That has helped boost cocoa-processing margins, with the so-called combined ratio — the price of cocoa products relative to beans — reaching the highest in more than a decade this year, according to KnowledgeCharts.

To read the full article, click here. 

18 Aug

Quantum Global’s Africa Investment Index shows Ghana on the rebound

Ghana is the eighteenth-most attractive economy for investments flowing into the African continent, according to the latest Africa Investment Index (AII) compiled by Quantum Global’s independent research arm, Quantum Global Research Lab. In 2016, Ghana attracted a net foreign direct investment of US$3.5bn.

According to research by Quantum Global Research Lab (QGRL), Ghana’s economy has experienced strong and robust growth over the past decade, making its success a case worth emulating by its regional peers. Industry was the main driver of overall growth with an annual average growth of about 13%, followed by services with 8.4% and agriculture with about 8%. The strong growth record has fostered the country’s graduation to lower-middle-income status in 2010.

Commenting on the Ghanaian economy, Prof. Mthuli Ncube, head of Quantum Global Research Lab stated: “Ghana’s democratic attributes are as robust as its economic growth, and by improving policies and institutions, successive governments have been able to build an attractive business climate conducive to growth. These measures include reducing the number of days it takes to register a limited liability company and days spent on resolving commercial disputes in the courts. Furthermore, the election of a new government in 2016 has revitalised the drive for higher growth and infrastructure investment, all which augurs well for investment opportunities in the country.”

The research noted that whilst the economy continued to grow on a steady pace until 2013, the GDP growth slowed from 7% in 2013 to 3.6% in 2016 due to structural challenges – such as the on-going fiscal deficits pushing public debt to over 70% of GDP, trapping the country in a cycle of debt service and borrowing.

Furthermore, a three-year power crisis and power rationing slowed down the private sector’s productivity and competitiveness. In addition, the significant external sector deficit and low world prices for the country’s gold, cocoa and oil exports were a major factor behind the economic slowdown.

Read More: How We Made it In Africa

08 Aug

Nigeria: Govt Announces 27 Industries to Enjoy Tax Break Under Pioneer Status (Full List)

The federal Nigerian government on Monday released the full list of the 27 key industries and products who will enjoy a tax break

The federal Nigerian government on Monday released the full list of the 27 key industries and products who will enjoy a tax break, being included in the revised list of ‘pioneer status’ incentives for prospective investors.

At the end of the meeting of the Executive Council of the Federation, FEC, last week, the Minister of Industry, Trade and Investment, Okechukwu Enelamah, disclosed the approval given to the 27 industries.

Mr. Enelamah did not, however, list the 27 industries.

The Minister of Information and Culture, Lai Mohammed, later confirmed that the creative industry was among the 27.

Earlier, the trade and investment ministry announced the lifting of the administrative suspension on processing pioneer status incentives, PSI, applications for prospective investors in the country.

Some of the benefits of the pioneer status include tax relief, mainly for corporate income tax.

Here is the full list of the 27 industries to enjoy the pioneer status.

Mining and processing of coal;

Processing and preservation of meat/poultry and production of meat/poultry products;

Manufacture of starches and starch products;

Processing of cocoa;

Manufacture of animal feeds;

Tanning and dressing of Leather;

Manufacture of leather footwear, luggage and handbags;

Manufacture of household and personal hygiene paper products;

Manufacture of paints, vanishes and printing ink;

Manufacture of plastic products (builders’ plastic ware) and moulds;

Manufacture of batteries and accumulators;

Manufacture of steam generators;

Manufacture of railway locomotives, wagons and rolling stock;

Manufacture of metal-forming machinery and machine tools;

Manufacture of machinery for metallurgy;

Manufacture of machinery for food and beverage processing;

Manufacture of machinery for textile, apparel and leather production;

Manufacture of machinery for paper and paperboard production;

Manufacture of plastics and rubber machinery;

Waste treatment, disposal and material recovery;

E-commerce services;

Software development and publishing;

Motion picture, video and television programme production, distribution, exhibition and photography;

Music production, publishing and distribution;

Real estate investment vehicles under the Investments and Securities Act;

Mortgage backed securities under the Investments and Securities Act; and

Business process outsourcing

Via AllAfrica