COCOBOD management has said that the board is not bankrupt as presume by some Ghanaians. This was contained in a statement issued in Accra and copied Business Week. It was signed by Chief Executive Officer (CEO) of the board, Tony Fofie.
According to the management its attention was drawn to publications in the media on Monday, 4th March, 2013 indicating that the Board is insolvent.
‘COCOBOD management wishes to respond that the issues contained in the said publication are full of inaccuracies and intended to give COCOBOD a bad press in the eyes of its business partners,’ the statement noted.
‘We, therefore, wish to react that the operations of COCOBOD are basically buying and selling of cocoa and cocoa proceeds are normally received after the cocoa has been sold,’ said the board.
The management said that in order for COCOBOD to effectively purchase cocoa and increase productivity, the company borrows monies for its operations. This borrowing is done every year.
It’s explained that COCOBOD operates two systems of borrowing every year. These are borrowing through the International Market; and Issuance of Cocoa Bills by Bank of Ghana.
The payment for the international borrowing is done with collateralised cocoa while that of the Cocoa Bills is paid when COCOBOD receives income from its operations.
There are two operating systems in the global cocoa market, “forward and spot sale” of cocoa. COCOBOD has over the years sold cocoa forward and this system has helped the industry and the nation at large. Ghana’s strategy has been to ensure that the cocoa is still sold at a premium over and above that of the global cocoa market. Ghana’s cocoa, therefore, earns more premium than Cote D’Ivoire. COCOBOD prides itself in the quality of its cocoa and this cannot be compromised. Besides that COCOBOD trades in traceable, organic, and certified cocoa.
‘Therefore the statement that Cote D’Ivoire is hitting the market with reforms while COCOBOD is refusing to respond is incorrect. On the contrary, it is Cote D’Ivoire which has now moved from its spot sales strategy to the forward sales strategy used by COCOBOD in order to try to catch up with COCOBOD,’ said the board.
It’s further explained that the publication also accuses COCOBOD Management of not being in a hurry to retrieve the debts from local processors because of personal gains with some companies. ‘It is on record that COCOBOD has taken steps to retrieve the debts the local processors owed. There are occasions where COCOBOD had been compelled to take legal action to retrieve debts owed it by some of the processors.’
However, in pursuing the processing companies for its debts, COCOBOD needs to be flexible in order to ensure that their operations are not stalled. This does not constitute laxity in the retrieval of such indebtedness or for personal gains. COCOBOD sells cocoa to local cocoa processors on agreed terms to attract investment into the sector, create employment and assist COCOBOD in its sales strategy. Our relationship with these companies is very professional.
On the issue of financial mismanagement by top management, ‘we wish to state that, COCOBOD operates a strict budgetary control system. By this system, an internal audit control ensures that every single expenditure is provided for in the approved budget, and that it is incurred in the overall interest of COCOBOD. This has become more relevant in the current situation where cocoa prices have depressed on the international market.’
This has come about as a result of reduced demand from consuming countries and excess production from producing countries. This turn of events has reduced the income of COCOBOD, as well as other stakeholders who have to manage their operations within the expected incomes.
The said publication also says the current debt has sent a bad signal to banks that were involved in the loan syndication for COCOBOD. On the contrary, the board said such banks have expressed a lot of enthusiasm in the 2013/2014 Trade Finance Facility currently being processed by COCOBOD.
‘We would like to assure all our stakeholders that COCOBOD is not bankrupt, in spite of the persistent fall in the world market price of cocoa for some time now. COCOBOD will continue to adopt measures which will enhance its operations and advance the economy of the country,’ said cocobod.