Ghana Plans to Sell Bills, Notes to Fund Cocoa Tree Replanting

(Bloomberg) -- Ghana’s cocoa regulator plans to sell bills and notes next year as it looks for ways to fund the replanting of diseased trees.

The Cocoa Board may issue 182-day bills and one-year notes to fund operations, said Chief Executive Officer Joseph Boahen Aidoo in a telephone interview on Tuesday. The board raised 3.7 billion cedis ($818 million) through cocoa bills this year, according to data compiled by Bloomberg.

About a fifth of Ghana’s cocoa tree stock is affected by swollen shoot disease, a virus that reduces yields and kills a plant within three to four years, while another quarter are old and unproductive. The country is the world’s second-biggest cocoa producer.

The regulatory group needs between $200 million and $250 million to cut and replant trees affected by swollen shoot disease, Boahen said. The board may also sign a $600 million, five-year facility with the African Development Bank in the last quarter of 2018, he said.

It’s also working on a $750 million medium-term loan from local and international banks, but the timing hasn’t been decided. Banks have begun indicating how much they would like to lend, Boahen said, declining to provide details.

“On our current budget, we have started cutting down affected trees and replanting on a minimal scale,” Boahen said. “We will go for cocoa bills to keep our operations going, at least the normal operations, while we wait for the loans talks to bear fruit.”

About 20 percent of Ghana’s cocoa trees are affected by swollen shoot disease and another 25 percent are old and need replanting, he said.

Cocoa output in areas with swollen shoot have decreased to 20 kilograms per hectare from 450 kilograms. The disease causes trees to have few pods or no pods at all. Some farmers have abandoned affected farms, creating a risk that farms could be converted to small-scale mining sites.

Still, the Cocoa Board is hopeful that production in the 2017-18 season will meet a 850,000-ton goal. The board will increase hand pollination among the 55 percent of tree stocks that are healthy to achieve targets, he said.

“That is why we need to move fast with solutions," he said. "We need to keep our head above water."

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