Local Licensed Buying Companies faces imminent collapse as fourteen (14) companies petitioned Cocoa Board.
Fourteen (14) Local Cocoa Licensed Buying Companies (LBCs) have petitioned the Chief Executive Officer, (CEO) of the Ghana Cocoa Board (COCOBOD) over what they described as unfair and unethical competition from their foreign backed local buying companies.According to the local LBCs they are not averse to competition but for the sake of protecting the stake of indigenous LBCs interest in the industry and largely the economy of Ghana.
In the petition to COCOBOD chanced upon by pabmcghnews.com, the LBCs blamed its foreign counterparts for setting upon parallel price by adding extra cash on each bag of cocoa purchased above the producer price announced by COCOBOD. It stated that the foreign LBCs receive a premium from off takers at an estimated amount of USD 100 – USD 250 per metric tonne and this is what is being misappropriated by them to pay an add on to government approved producer price conventional cocoa.
These funds according to the petitioners are meant for sustainability programs but the funds are being misapplied as top up in order to gain unfair competitive advantage
The petitioners also noted that foreign LBCs such as Cargill, Olam, Nyonkopa Agroecom (Amajaro), Ecom etc, add extra cash ranging from Gh c 10.00 to Gh c 25.00 on each bag of cocoa purchased to the producer price of Gh c 475.00.
This practice by the foreign LBCs according to the petitioners can be described as engaging in black marketing
The petitioners also raised issues of access to working capital and cost of capital, operational cost and coverage, shrinking market share of indigenous LBCs, repatriation of profits by foreign LBCs
EFFORT AT CURBING SMUGGLING
The petitioners indicated that the collaborative effort between the governments of Ghana and Ivory Coast to curb smuggling of cocoa across the borders of the two countries would be a mirage if foreign LBCs and any other LBCs are not stopped from adding extra cash to the producer price on the pretext of incentive or sustainability. It further stressed that that the cocoa that is purchased with the extra cash is not sourced from registered farmers under a certification programme but is purchased from anybody on the market which can motivate individuals to make sure their cocoa reaches a certain buyer regardless of the location.
“Indigenous LBCs are being exterminated largely thorough unfair and unethical practices and the regulator should not watch unconcerned”, the petitioners stated. The foreign LBCs are rather cutting corners and employing destructive competitive prices, the indigenous ones have been law abiding and are suffering it added.
The petitioners therefore called of the Chief Executive Officer of COCOBOD to as a matter of urgency take the necessary steps to address all the issues raised in the petition and save the indigenous LBCs from collapse especially Producer Buying Company (PBC), since its collapse would have devastating consequences on every indigenous LBCs in Ghana and Government of Ghana. The collapse of PBC they noted will lead to a situation where no financial institution will be willing to transact business with any indigenous LBCs in relation to cocoa purchasing
The petitioners also noted that LICOBAG cannot serve the interest of the indigenous LBCs and have initiated moves to withdraw their membership from LICOBAG for a new association that would represent the interest of indigenous LBCs.