Matthew Mpoke Bigg, Sarah McFarlane and Nigel Hunt Enchi, Ghana/ London
A POOR cocoa harvest in Ghana has left the world’s second-largest producer struggling to fulfil sales contracts and is driving up the price of the commodity on global markets.
The unexpected fall in production, which farmers blame on a lack of pesticides and bad weather, could leave the world’s leading chocolate makers short of beans and deal a fresh blow to the west African country’s precarious finances.
Senior government sources now estimate Ghana’s 2014/15 crop will not exceed 700 000 tons, far below industry regulator Cocobod’s initial forecast of more than 1 million tons.
“There has been a crop failure and the latest indication is that our best (output) is around 690 000 to 700 000 tons,” a government source who declined to be identified said yesterday.
Ghana had a crop of about 900 000 tons in 2013/14.
“This year every farmer is crying,” said Johnson Mensah, who serves as chief farmer for Western Region South, which has 174 000 cocoa farmers. “We haven’t experienced a season like it in a long time.”
European traders said the shortfall meant Ghana might be unable to supply about 150 000 to 200 000 tons of cocoa, which it had sold and might seek to roll those contracts forward to next season.
Ghana’s cocoa is sold to international buyers by the state-owned Cocoa Marketing Company (CMC), a wholly owned subsidiary of Cocobod. Cocobod was not available for comment yesterday.
“There are a lot of outstanding shipments still for everyone in the trade from the CMC,” one European trader said.
Global cocoa prices have already begun to climb, with a smaller crop in Ghana likely to lead to a significant global deficit in the 2014/15 season.
ICE London futures have risen about 5 percent in the last two weeks.
“A lot of people did not believe in a global deficit. It’s only now when they factor in a 700 000 ton Ghana crop that they will bank on a deficit which could move the market another £100 (R1 825) higher even after the recent rally,” one trader said.
A shortage of supply from Ghana could create serious problems for international traders and premium chocolate makers such as Lindt, whose recipes rely heavily on the world’s top producer of high-quality cocoa beans.
“The market has a problem in that nobody wishes to put the CMC in default,” said Derek Chambers, the head of the cocoa department at Paris-based Sucres and Denrees.
Some traders have been scrambling to buy any available Ghana cocoa stocks in Europe and premiums for in-store bagged supplies have risen to about £200 (R3 641) above London futures.
Ghana’s economy grew rapidly for years as exports of its gold, cocoa and oil boomed, making it a magnet for investors who also liked its political stability, but the government now battles fiscal problems worsened by a fall in commodity prices. – Reuters