BD Associates will start producing cocoa liquor at a $20 milllion, 12,500-tonne plant in Ghana by the end of this year, executives in the world's No.2 cocoa producer said.

The firm, which represents UK, Kazakh and Ghanaian investors, has secured a 10,000-tonne bean supply agreement with industry regulator COCOBOD.

Kazakh confectionery giant Rakhat, a technical adviser to BD Associates, will be the firm's main customer.

BD Associates, which had initially hoped to secure as much as 50,000 tonnes from the regulator, said it could expand the plant's capacity after production had begun if it secured more beans from the regulator.

"By the end of the year, it will be ready. The bean supply agreement is for 10,000 tonnes a year. It is an open agreement, we could still get more," said Ernest Opoku Ansah, BD Associates' representative in Ghana.

Ghana, which borders world No.1 producer Ivory Coast, is set to see installed processing capacity reach almost 300,000 tonnes by next year, roughly half of its average annual crop of 600,000 tonnes.
Four firms already process cocoa in Ghana: family-owned Afrotropic, international firm Barry Callebaut, German-controlled West African Mills and partly state-owned Cocoa Processing Company.

U.S. agribusiness giant Cargill is due to complete a 60,000 tonne capacity plant later this year.

But as processing capacity continues to rise, doubts linger about Ghana's ability to supply firms with all the beans they need.

Processors usually favour the smaller and cheaper mid-crop beans, but this year's poor weather means the mid-crop will fall far short of initial expectations and some processors fear they may not get enough beans.

The main crop, which ended last week, is understood to be about 550,000 tonnes, with the 2006/07 total harvest likely to fall short of earlier estimates of about 700,000 tonnes.

"There is going to be less light crop available than last year because of rain patterns," one processor said. "We don't think it will warrant problems but you never know."

Credit: Reuters