Ghana as once the world’s leading producer and exporter of cocoa beans, only to be overtaken by the Ivory Coast in the past decade or so, has shamefully not had her own money reserve to pay for the cocoa beans she purchases from the cocoa farmers. This has been the recurring situation from probably the very inception of her independence, or after the overthrow of her first President, Dr Kwame Nkrumah.
The leaders of the country have been resorting to syndicated loans to pay for the cocoa beans purchased from the farmers and in what is forward buying.
The government take the loans in advance of harvesting the cocoa beans. The country may, or may not, be able to meet the target of metric tonnes of cocoa beans for the year or season for which the loan has been taken. When the country whose agricultural production is dependent on the weather fails to meet the target, imagine what happens when the loan taken has been made use of.
In this brief publication, I am not interested in the intricacies of syndicated loans and forward buying but in why the country over all these decades, still have to go for foreign loans to be able to pay the cocoa farmers for the cocoa beans purchased from them?
Why is it that we are unable as a country to save any money from the sale of our cocoa beans? Or, is a case of the successive governments using any profits we get from the sale of the beans on other projects without leaving any for the purchase of the following year’s produce? If yes, is it a good practice?
The cocoa industry has become an entity under COCOBOD with their management. Why can’t they manage the industry such that they will have their own reserve of money to buy cocoa without necessarily going for foreign loans year in year out? I can’t get my head around this.
The management and officials at the industry are enjoying fat salaries while the poor farmers are suffering.
It is a bad management on the part of both the government and COCOBOD to always source for loans before they are able to pay for cocoa purchased from farmers. This is a bad business practice, regardless of whatever any business person tells me.
We take the loans, use the money, before the cocoa is harvested. It does happen that in some years, our harvest is unable to meet the loan we have taken hence must wait for the following year’s harvest to be able to make up for the shortfall.
Why are we mismanaging the country like that?
“A syndicated loan is one that is provided by a group of lenders and is structured, arranged, and administered by one or several commercial banks or investment banks known as lead arrangers”.
What Is Buying Forward? “Buying forward is when an investor negotiates the purchase of a commodity at a price negotiated today but takes actual delivery at some point in the future. Investors and traders buy forward when they believe the price of a commodity is going to increase in the future”.
On forward buying with respect to Ghana taking loans from countries or foreign companies interested in our cocoa beans, and unable to save money for future purchases from the cocoa farmers, is not good enough.
I am sure businessman Kennedy Agyapong (Hon.) as president will have a better solution to this cyclical syndicated loans/forward buying.
With all its advantages and disadvantages, it is about time Ghana had her own enough money generated from the sale of her cocoa beans to pay for purchases of the beans from the farmers without always falling on importing countries or companies for loans in advance in what constitutes the payment for their forward purchases.