Cocoa Processing Company (CPC)
Company Profile and History
The CPC was incorporated in November 1981 as a Limited Liability Company. The Company comprises two factories, namely The Cocoa Factory and The Confectionery Factory. The CPC factories process only the choicest premium Ghana cocoa beans. In 2002 CPC's position as one of the world's best chocolate producers was re-confirmed at the Monde Selection Competition held in Paris, France. At this Competition all its seven brands of chocolate and ALLTIME Drinking chocolate powder won gold medals. CPC is listed on the stock index of the Ghana Stock Exchange, the GSE All-Share Index.
The company now has cocoa beans throughput capacity of 64,500 tonnes, up from an initial installed capacity of 25,000 tonnes. The German company MAN Ferrostaal AG was commissioned in 2004 to update and expand the facilities of the Company. MAN selected Buhler (Chocolate & Cocoa) as the technical partner for handling the project. The new cocoa processing facility, which opened in October 2005, has a capacity of four metric tons per hour and is fully computer-controlled. This makes it the most advanced plant of its kind in Africa.
In Country Location
Plot No. IND/A/10/1, Cocoa Processing Road, Heavy Industrial Area, Tema, Ghana;
Services and Products
The Cocoa Factory processes raw cocoa beans into semi-finished products-cocoa liquor, butter, natural/alkalized cake or powder whilst the Confectionery Factory manufactures the Golden Tree chocolate bars, couverture, pebbles (chocolate coated peanut), VITACO and ALLTIME drinking chocolate Powder, ChocoDelight (Chocolate spread), ChocoBake and Royale natural cocoa powder. The CPC factories process only the choicest premium Ghana cocoa beans without any blending, probably the only factory in the world which can make such a claim.
Number of Employees
CPC declared revenue of 59.3 million cedis ($42.5 million) for the 2007/08 financial year which runs from September to September, saying its operations were hampered by high costs as a result of the rise in oil prices. The company declared a net profit of 1.27 million cedis in 2007/08, compared to 647,193 cedis in the previous year. Unreliable power supply also contributed to operational costs which rose by 22 percent. Projected revenue for 2008/09 is $208 million.
Currently, CPC exports about 95 percent of its semi-finished products to Europe and the Americas of a total of approximately 550,000 exported by Ghana. Cocoa makes up 20% of Ghana's total exports. According to the International Cocoa Organisation (ICCO) the country's commercial crop in 2005/2006 reached a record high of 646,000t. Ghana’s cocoa production for the 2007/08 crop season was 758,908 tonnes, significantly above the forecast of 650,000 tonnes. CPC produces 21,810 MT annually.
The Company’s main objective is to process cocoa beans by adding value to them.
The Company focused on an expansion programme which increased its cocoa throughout capacity from the original 25,000 metric tonnes per annum to 64,000 metric tonnes per annum. In addition CPC only deals with buyers on a spot-sale contract basis which is aimed at reducing the company's exposure to the volatility of the international cocoa trade.
As a result of the Company's continuing product development activities, a new product namely, Royale Natural Cocoa Powder was launched in August 2005. The popularity of the product within the few months of its introduction has been phenomenal. CPC is pursuing various research activities geared at offering consumers a wider range of chocolate products and to grow revenue.
Through strategic marketing efforts, the Company was able to realize reasonable margins on its semi-finished cocoa products. The Company's effort at repositioning the Marketing Department to make it better able to move large volumes of products onto the market is ongoing.
Ghana, the world's second biggest cocoa grower, is further encouraging firms to grind beans locally rather than shipping raw cocoa overseas, as it aims to draw greater income from making and selling value-added products.
Ownership of Business
CPC, formerly wholly-owned by the state, was partially privatised after the government offloaded 25 percent of its stake and listed it on the Ghana Stock Exchange in February 2003.
The government owns about 48 percent of CPC’s shares, with state-run industry regulator Ghana Cocoa Board controlling about 22 percent.
Benefits Offered and Relations with Government
Ghana is the only cocoa producing country in the world without a fully liberalised marketing system. In the early 1990s, the Ghanaian government opted for a gradual introduction of reforms, which have so far included only the liberalisation of internal marketing, privatisation of input distribution (for example, chemicals) and reform of extension services. Thus, Ghana’s state-owned Marketing Board (Cocobod) still controls external marketing. The Quality Control Division, a subsidiary of Cocobod, is responsible for the final quality checks of cocoa beans. Ghana produces good quality cocoa, for which it receives a premium on the world market.
Through a system of forward sales, Cocobod still manages to pre-finance cocoa production, and price stabilisation has remained intact. The Ghanaian economy is heavily dependent on cocoa exports so the government is loath to relinquish control; private buyers rely on government licences to operate; and global buyers are guaranteed a good-quality product.
The liberalisation of internal marketing started in 1992 with the introduction of private Licensed Buying Companies (LBCs) as competitors to the state-owned monopoly in buying cocoa from farmers. After introducing competition in the internal marketing of cocoa, the government decided to allow qualified LBCs to export part of their cocoa purchases from October 2000.
Officially, LBCs are allowed to export 30% of their domestic purchases, if they meet the conditions set by the Ghanaian Ministry of Finance. The idea behind the gradual pace of the reforms was that this transition period would allow LBCs to become familiar and acquire the necessary skills for effective external marketing. The transition period was to have ended in 2003, with a final decision on whether to proceed or not with full liberalisation of the external market.
But the process has stalled. No formal decision on full liberalisation has been taken.
Ghana has traditionally exported almost its entire crop of cocoa beans for processing to foreign chocolate production plants. This policy changed in mid-2003 with a new administration under President John Agyekum Kufuor setting the goal of broadening the Ghanaian cocoa business by investing in national cocoa processing facilities. CPC was chosen in early 2004 to be updated and expanded as the first step of consolidating the cocoa business inside Ghana. The Ghanaian Government has pledged to increase bean production to over one million tons.
Taxation is as follows: Corporate tax - 8% on export income, 25% for hotels and 35% for others; locational incentive - 25-50% tax rebates; tax holidays-indefinite for cocoa farming; and tariff exemption-100% duty exemption for production equipment.
In late 2008 CPC completed its expansion programme that has more than doubled its throughput. The company now has cocoa beans throughput capacity of 64,500 tonnes, up from an initial installed capacity of 25,000 tonnes. The expansion, which was in two phases, began in 2003 with a loan of Euros 22 million and an additional $22 million, plus a local component of GH¢1.67 million. The first phase which entailed the construction of a new plant to process 30,000 tonnes of cocoa into liquor was commissioned in 2005. The second project involved the upgrading of the old cocoa factory to process 34,500 tonnes of semi-finished cocoa products, up from its 1965 installed capacity of 25,000 tonnes.