The Director of Business Operations at Dalex Finance, Joe Jackson, says the economic impact of COVID-19 on agriculture and agribusiness, particularly the cocoa subsector, could hit farmers hard.
According to him, the Ghana COCOBOD is projecting about a billion dollar in losses due to the spread of the virus.
Ghana signed a syndicated loan facility of 1.3 billion dollars for the 2019/2020 cocoa crop production season.
But Mr. Jackson told Citi Business News, cocoa farmers could face difficult times if measures are not put in place to support them to stabilize their operations.
“It is easy to talk about this in abstract terms. The CEO of COCOBOD has estimated that, we have lost 1 billion dollars not cedis, and the cocoa syndication loan is on hold. We are unable to syndicate. What’s happening to our cocoa farmers, where is the money to buy cocoa? What’s going to happen to our by-day labourers who are in the rural areas? You know, it’s easy for me to sit in Accra, sit behind my turbo net and talk to you over the line. There is some real person in a village in the Eastern Region who is a migrant labourer, who doesn’t know if they don’t buy the cocoa, he won’t get paid,” he said.
Earlier loan agreements
Last year, Ghana Cocoa Board signed a 1.3 billion dollar syndicated loan to cater for the production of cocoa for the 2019/2020 crop season.
The 2019/2020 syndicated loan would be drawn down in three tranches. First would be 50 per cent of the $1.3 billion, which would translate to about $650 million with an additional $450 million to be made in November.
Already, Ghana Cocoa Board has signed a new 3-year receivables-backed trade finance facility of US$300m to refinance Cocoa Bills raised by Bank of Ghana on behalf of Cocobod and/or to finance production enhancement programmes.
Also, Cocobod received a US$600 million syndicated loan facility from the African Development Bank, and Credit Suisse Group AG, to finance key components of the organisation’s productivity enhancement programmes.
Reduction in global cocoa prices causes Ghana $1bn deficit
Ghana’s cocoa industry is a major contributor to Government Revenue and GDP. It employs approximately 800,000 farm families spread over six of the ten regions of Ghana as the crop also generates about $2 billion in foreign exchange annually.
But with the devastating effects of the novel Coronavirus pandemic, the industry could suffer in the coming days as the pandemic has plunged cocoa prices on the world market.
According to the International Cocoa Organisations (ICCO), global cocoa prices have dropped to USD 2218.47 per tonne as at April 3, 2020.
This has so far caused the country $1 billion, according to the CEO of COCOBOD, Joseph Boahene Aidoo.