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Rising output costs strains in Ghana's cocoa industry
Some private cocoa buyers in Ghana were struggling to break even as the rising production costs strained the infrastructure in the world's second largest producer of the crop, the head of a buyers' association has said.
Output in the country increased from 500 000 tons in the 2002/3 season to 736 000 tons in 2003/4, leading to shortages in warehousing space and slower quality checks as Ghana’s industry regulator, Cocobod, deals with the extra beans.
For those buyers who borrowed heavily to finance their cocoa purchases, any delay in their expected sales to Cocobod will massively hit their cash flow.
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"It has been extremely difficult for us to break even in the lasttwo years. It hasn't been easy to buy and sell at the pace we want to," said Ali Basma, the president of the Licensed Cocoa Buyers' Association of Ghana.
Cocoa buyers are a crucial part of Ghana's cocoa production chain, under which cocoa is bought from the farmer by private buyers and sold to Cocobod for export. Basma said that additional warehouses and a better relationship with the Cocobod management, under new chief executive Isaac Osei, should improve the trading conditions in the coming season. |
The buyers' push to deliver their cocoa to Cocobod as fast as possible can put them on a collision course with the regulator's quality control division, which checks the cocoa when it’s upcountry, and again for a second time at the port.
And this means that cocoa can be rejected at the second check, forcing buyers to sort their beans again, part of stringent control measures that help Ghana demand a premium
for its beans. "That double check standard really affects us.
We want the quality to be preserved but not by making the buyers suffer for it," Basma said.
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