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Davao del Sur’s Malalag Port taken over from LGU by PPA

By Imee Charlee C. Delavin, Reporter

THE Philippine Ports Authority (PPA) has taken over the management and operations of Malalag port in Davao del Sur to upgrade the terminal and bring it to international standard as it positions the facility to become a third major international gateway.

Malalag Port
Malalag Port — FLICKER_MBB8356

 

In a statement, the port regulator said P500 million will be initially spent starting this year for the development of Malalag port, which lies on the Davao Gulf.

“The local government unit (LGU) of Malalag in Davao del Sur yielded the operations of the port to the PPA in order to give the terminal the much-needed facelift as it has been underdeveloped since the port was devolved to the LGU in May of 2000,” PPA said on Wednesday.

It noted that together with the local government of Malalag, the transfer was formalized through a Memorandum of Agreement signed by Mayor Peter Paul T. Valentin and PPA General Manager Jay Daniel R. Santiago last month.

“With PPA now at the helm, much bigger infrastructure development for the terminal is in the offing to spur economic growth not only in Malalag (to help it) play a vital role in the economic boom in the province of Davao del Sur,” Mr. Santiago was quoted as saying.

“The Mayor already agreed to the proposed development of Malalag port, which will start at the end of this year, with an initial cost of P500 million,” he added.

In May of 2000, PPA devolved the management and operations of the port to the local government under Administrative Order No. 02-1998. Malalag has been operating the port past the expiry of its contract in July 2011.

However, under the control of the LGU, PPA said the physical infrastructure as well as dredging, physical land side infrastructure remained underdeveloped, prompting the need for PPA to step in.

Malalag port is in the southwest of Malalag Bay, 25 kilometers (km) from Digos and approximately 88 km south of Davao City.

Cargo handled at the port includes molasses, sugar, steel products, vehicles and heavy equipment, as well as general cargo.

The PPA had earlier announced it expects increased efficiency from ports with plans to further improve and develop major gateways around the country.

The other seaports that the government is looking to rehabilitate or upgrade include the Port of Iloilo, Abra de Ilog in Mindoro, and the port in General Santos City. It is also conducting the ongoing rehabilitation and construction of a passenger terminal building in Cagayan de Oro.

PPA reported that the volume of cargo passing through the country’s ports rose 12% in 2016 to 249.567 million metric tons mainly due to increased trade associated with the growing economy. It generated a P6.159 billion net profit, beating its target by 165%. The result was also up 8% against the P5.705 billion registered in 2015 driven by increases in Ro-Ro fees, berthing fees and vessel lay-up fees.

In the first quarter of 2017, volume of cargo grew 4.15% year on year, still mainly due to increasing trade and the growing economy but tempered by the mining industry crackdown.

New Finance department offices to shepherd fiscal reforms

PRESIDENT Rodrigo R. Duterte has signed Executive Order (EO) No. 31 creating a “specialized” body within the Department of Finance (DoF) tasked to give strategic advice, economic policy research, and management of the department’s reforms.

Signed by Mr. Duterte on June 28, EO 31 directs the formation of the Strategy, Economics, and Results Group (SERG), which will be under the control of the Secretary of Finance.

The newly-organized group is also coterminous with the tenure of the DoF Secretary under the Duterte administration.

“There is a need to create a specialized group in the DoF to provide strategic advice, economic policy research, and reform management and coordination, including reform coalition building, in the area of fiscal policy to support the priority reforms under the 0+10-Point Socioeconomic Agenda of the national government,” the EO read in part.

According to the new EO, the SERG is composed of Strategy and Results Office (SRO) and Fiscal Economics Research Office (FERO), each headed by a Director IV.

The SRO is mandated to develop strategy and plans to convert priority socioeconomic agenda items into executive and legislative action “from a fiscal perspective” as well as provide fiscal policy advice and inputs to the DoF, the EO said.

It will likewise manage an up-to-date fiscal economic data bank, prepare implementation plans and build fiscal reform coalitions in support of the government’s priority programs, it added.

Meanwhile, the FERO is in charge of research and analysis, simulation, and monitoring of priority programs, EO 31 stated.

It will also initiate and participate in the discussions and collaboration with development partners and other stakeholders.

Mr. Duterte’s economic team unveiled a 10-point socioeconomic agenda just days after he won election on May 9, reassuring investors by signaling continuity from the economic policies of his predecessor that had won for the country investment-grade credit ratings in 2013.

The economic blueprint aims to achieve more inclusive growth by relaxing foreign ownership limits, lowering personal and corporate income taxes, and improving the ease of doing business in the country, among others. — Ian Nicolas P. Cigaral

Domestic travel dominated by youth demographic

MILLENNIALS were the most traveled within the country last year, according to the latest data released by the Philippine Statistics Authority and Department of Tourism.

Millennials dominate domestic travelThe 15 to 24 year-old demographic traveled across the country the most, followed by the 24 to 34 year-old group at 24%, the 35 to 44 group at 19%, the 45 to 54 group at 14%, the 55 to 64 group at 9% and 65 and over at 6%.

Three out of five Filipinos over the age of 15 made two trips on average.

The majority of these trips were for pleasure and only 3 in 10 travelers were visiting relatives or friends. The median age of travelers was 34 years old.

The survey covered the period April 1 to Sept. 30 last year and showed that over 3.4 million individuals travelled within that period.

The top 10 destinations were the National Capital Region, Negros Occidental, Pangasinan, Cavite, Quezon, Bohol, Cebu, Camarines Sur, Laguna and Leyte.

Most provinces in the top 10 had beach attractions such as Quezon, Bohol, and Pangasinan.

Among NCR residents, the mostly visited places were Laguna and Cavite receiving 3.3% of the total, Rizal at 3.2%, Bulacan at 3.1% and Batangas, 3.0%.

On average, domestic tourists stayed as long as five nights and arranged their trips individually. Only less than 1%t availed of an airline promo.

“(This) is a welcome development,” said Maria Cielo Villaluna, external communications head and Philippine Airlines spokesperson. “This aligns with our end-goal of the airline industry which is to increase share in various markets thus widening customer base, to create that multiplier effect.”

Villaluna attributes the number of younger travellers to the variety of travel options available to them.

“With the number of existing air carriers in the country, there are more choices,” she said in an e-mail to BusinessWorld.

Seventy-nine percent of independent travellers spent their money on transportation, typically spending P476 on land transportation and P5,179 on airfare. About 55% spent on shopping, 42% on food and beverage, and one-fifth on local transport.

Domestic tourism peaked during the Christmas holidays with 49% of respondents saying they scheduled a trip during that period in the last 12 months, followed by All Saints’ Day at 40.7% and Holy Week at 27.6%.

However, when it comes to outbound travel, the older demographic groups traveled the most. About 245,000 Filipinos 15 years and above went out of the country for holidays, with their median age at 45.

One in five of these tourists belonged to either the 35 to 44 or the 55 to 64 age groups. These visitors spent about P50,800 on average and stayed for 17 nights. The top foreign destinations were China, including Hong Kong, Malaysia, Japan, the US and Singapore.

“This data is important for the Department of Tourism,” said Milagros Say, director of the Office of Tourism Development Planning Research and Information Management, “as this will be a good input in terms of tourism development and marketing efforts of the department.”

According to Ms. Say, the trend is most likely to continue this year. — Mario M. Banzon

Net satisfaction rating one year on

PRESIDENT Rodrigo R. Duterte (PRRD) marked his first year in office with a fresh personal record-high net satisfaction rating, buoyed by increases in the Visayas and Luzon areas outside Metro Manila that offset a sharp drop in his bailiwick, Mindanao, which nevertheless kept the best score, a Social Weather Stations (SWS) survey showed. Read the full story.

A Letter Notice cannot substitute for a Letter of Authority

 Taxation is the lifeblood of the government. Through the collected taxes, the government is able to fund the increasing need of its people for infrastructure, education, health, etc. The Bureau of Internal Revenue (BIR) is the Philippine government’s largest revenue collecting arm. For this year alone, the Bureau was assigned a P1.8 trillion tax collection target.

Throughout the years, the BIR has implemented various programs to improve its tax collection efforts. In 2003, it issued Revenue Memorandum Order (RMO) Nos. 30-2003 and 42-2003 which provided policies and guidelines to detect tax leaks by matching data from the BIR’s Integrated Tax System (ITS) and data from third party resources. Discrepancies generated through these matchings were used to unearth what could potentially be undeclared sales and/or over-claimed purchases by various taxpayers.

This “no-contact-audit approach” enables the BIR to use computerized matching to compare data from records or various returns filed by a taxpayer against those gathered from its suppliers or customers, and even those reported to other agencies, particularly the Bureau of Customs. Taxpayers with noted discrepancies are then informed of the findings through the issuance of a Letter Notice (LN) by the BIR. Consequently, such taxpayers are given 120 days to reconcile the inconsistencies; otherwise, deficiency taxes will be assessed.

In one of its recent decisions, the Supreme Court (SC) held that the absence of a Letter of Authority (LOA), makes the assessment unauthorized and thus, void. This is despite the prior issuance of an LN. According to the court, the BIR’s failure to issue an LOA constituted a violation of due process and was considered fatal to the tax audit.

The SC differentiated an LOA from an LN, noting that LNs only serve as notice of any discrepancy to the taxpayers and is not in any way a substitute for an LOA which grants authority to the revenue officers to examine the books of the taxpayers. The LN operates similarly to a Notice of Informal Conference, an erstwhile requirement which was removed from the BIR’s tax audit process when the Bureau issued its revised regulations for tax audits back in 2013.

The SC stressed that the BIR must issue an LOA prior to issuing a Preliminary Assessment Notice (PAN), a Final/Formal Assessment Notice (FAN), or a Final Decision on Disputed Assessment (FDDA) to the taxpayer; otherwise, the assessment is rendered void for lack of due process.

This decision overturns the earlier ruling of the Court of Tax Appeals (CTA) en banc which held that the LN in essence, can serve as proof of the revenue officer’s authority to examine the books of the taxpayer. The court pointed out that the taxpayer can no longer question the validity of the tax assessment on the ground of lack of an LOA since the BIR had provided the requisite legal and factual bases of the deficiency tax being assessed. In the higher interest of justice, the SC considered the absence of the LOA as fatal to the case, underscoring the importance of due process.

The SC’s decision to reverse the CTA ruling thereby effectively negates RMO No. 55-2010, which was issued by the BIR based on the earlier CTA ruling. As it is, the BIR has yet to issue guidelines on this recent decision by the SC.

Due process is a basic right guaranteed to all persons under the Philippine Constitution. It is an elementary rule that no person shall be deprived of property without due process of law. To boost taxpayers’ compliance with the tax laws and regulations, the government, through its tax authorities, must continually build trust and confidence among taxpayers and in the society in general.

The pronouncement of the SC brings to light, once again, the significance of due process in taxation. While it is imperative for the tax authorities to generate revenues through exaction of taxes, the government’s power to tax must be exercised with justice. This can only be achieved when collection of taxes exercised through programs are implemented with reasonable requirements and within the bounds of the law.

However steep the BIR’s collection target is, it must be reached only through acts that are within the bounds of the Bureau’s authority.

The views or opinions presented in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The firm will not accept any liability arising from the article.

Kathrine Joy S. Capales is an Assistant Manager at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.

+63 (2) 845-2728

kathrine.joy.capales@ph.pwc.com

Lufthansa considers resuming flights to Manila

GERMAN flag carrier Lufthansa has sounded interest to fly again to Manila, citing the country’s “very” developed market and good economy.

Lufthansa logo“I can only say that we, of course, [in] Lufthansa is also interested in having direct flights to Manila again to elaborate on the economic situation of the Philippines so of course we’re interested in flying to Manila again,” Lufthansa Group Senior Director Tobias Heinrich told reporters at the sidelines of a signing ceremony for a Philippine-German agreement for maritime cooperation on Tuesday.

Lufthansa Airlines discontinued its daily connection from Frankfurt to Manila in 2008 due to commercial reasons as the German carrier said then that it plans to re-allocate its existing resources to tap into the profit potential of emerging markets then like China and India.

“It’s a very developed market. In Asia also, we really would like to see and participate of course in the development of the Philippines as a member of ASEAN (Association of Southeast Asian Nations). Southeast Asia is a very interesting market for us, so this is what makes it attractive,” Mr. Heinrich said. The Philippine economy registered one of fastest growth in the region, with a 6.9% gross domestic product (GDP) expansion last year. The government targets GDP growth to hit 6.5-7.5% this year, amid an infrastructure buildup that is seen to push growth to 7-8% from 2018 to 2022. Transportation Secretary Arthur P. Tugade said there’s already on-going discussions with Lufthansa for the resumption of the flights.

“Hopefully, one day, we can see again Lufthansa flying into the Republic of the Philippines on its own, that is being discussed right now,” Mr. Tugade said separately.

Lufthansa did not say when it would resume the service.

“We are in constant calculations but I cannot say when this would be a possibility but we would very much like to fly into Manila again,” Mr. Heinrich said. “Both [for] business as well as private travelers — incoming as a tourist destination, as business destination, but also business into Germany so it’s mutual bilateral interest.”

As one of the world’s largest airlines, Lufthansa flies to at least 205 destinations with around 10,712 weekly flights. The Lufthansa Group, meanwhile, offers one of the most comprehensive networks of air services in the world, serving at least 316 destinations in 101 countries worldwide and over 23,140 weekly flights.

Mr. Heinrich was part of a German delegation that visited Manila with German Federal Ministry of Transportation and Infrastructure State Secretary Michael Odenwald. Mr. Tugade invited the German official during a meeting earlier this year where they agreed to expand ties in maritime, aviation and road transport, among others.

The resolution of one of the longest running disputes in aviation involving the Philippine government and the Philippine International Airport Terminals Co., Inc. — whose foreign partner is German airport builder and operator Fraport AG — paved the way for more bilateral cooperation between the two countries.

“The payment of Philippine government was very important to re-establish trust. So, the step [Mr.] Tugade took was a very important step. So I think we can be very optimistic here and make a good start,” Mr. Odenwald said in his speech during the signing ceremony for the maritime accord. — Imee Charlee C. Delavin

Why Philippine market matters most in ASEAN

By Arnold S. Tenorio, Research Head

FORGET mega-cities, or countries for that matter, if companies want to take part in ASEAN’s consumer growth story.

This is the main message of a new report jointly produced by consumer insights firm Nielsen and strategy consulting company AlphaBeta.

Titled “Rethinking ASEAN,” the new report aims to dispel eight myths about the region’s consumer markets.

The first myth concerns Indonesia’s status “as the only market that really matters in ASEAN.”

Despite Indonesia’s outsized share of 40% of the region’s economic output, the Philippines, the report said, matters more, since it accounts for a bigger slice of the demand in ASEAN’s top 50 markets across 10 major consumer products, namely, tobacco, chocolates, detergent, soft drink, instant noodles, diapers, shampoo, facial moisturizer, beer and vitamins.

In three of the 10 product categories — detergent, soft drink and shampoo — demand coming from the Philippines tops those of the six other ASEAN countries covered by the study. Besides Indonesia, the study also covers Malaysia, Myanmar, Singapore, Thailand and Vietnam.

This leads to the second myth that the study aims to explode: Consumer market growth doesn’t vary much within countries.

According to the report, the traditional approach of looking at country-level data to discern growth patterns is less instructive than looking under the hood of a nation and into so-called sub-national, even sub-regional markets.

As an example, the report cited demand for detergent in Thailand, which at a 1.2% growth clip, masks the more phenomenal 8.9% expansion in Chiang Mai, one of that country’s regions having a population of more than 500,000.

This begs the question of how growth fares in ASEAN’s mega-cities, which are widely-believed to be home to the region’s biggest consumer markets — the third myth that the report aims to dispel.

Citing demand for facial moisturizer, the report noted that lesser-known regions in Thailand — such as Nakhon Ratchasima, Chonburi and Rayong — are giving Bangkok a run for its money. The report classifies the former three Thai regions as “middleweight,” or those with populations of between 500,000 and 5 million, as against Bangkok, a mega-city that is home to upwards of 5 million people.

In the soft drink category, in which the Philippines has the biggest share at 51% of overall ASEAN demand, middleweight regions like Cebu, Cavite and Negros Occidental are also giving Manila a run for the money.

Even in terms of growth, demand in mega-cities is trailing those in middleweight regions — dispelling a fourth myth. In the chocolates category, large middleweight regions, or those with populations of between 1 million and 5 million, are expected to register faster demand growth through 2030.

The report points to six growth drivers in middleweight regions. Apart from a growing consumer base, the five other factors are cross-border trade and logistics, the existence of economic clusters, the emergence of satellite regions, natural resource endowments and the boom in tourism.

The second of these growth drivers leads to a fifth myth: modern distribution channels only exist in mega-cities. According to the report, middleweight regions are witness to the growing presence of modern store formats at a rate faster than what was seen in mega-cities.

While the share of modern trade in total sales grew 2.1% between 2010 and 2016 in mega-cities, the growth was faster at 2.6% in large middleweight regions, the report said. Modern trade channels refer to convenience stores, hyper- and supermarkets, while traditional channels include wet markets, traditional stores (called ‘sari-sari’ in the Philippines), among others.

The sixth myth that the report aims to dispel is the supposed direct relationship between income level and consumer demand. According to Nielsen/AlphaBeta, this relationship is not straightforward in all product categories.

Whereas the traditional product adoption S-curve applies to detergents, not so for products like facial moisturizer. In the example of Indonesia, the report pointed out that 263 regions in that country are in the “take-off” phase for instant noodles, but only 87 regions for chocolates.

This leads to the seventh myth about ASEAN consumer markets: The major markets in ASEAN won’t change much in 2030. According to the report, middleweight regions will become the dominant markets come that year, displacing the mega-cities.

In chocolates, Manila, which is the top market for that product category in 2016, is being challenged by Cebu and Cavite, which ranks 15th and 11th in ASEAN overall.

So how should companies navigate in this much-differentiated consumer marketplace? According to the report, companies should be picking not countries (the eighth myth), but regions or cities whose demand are expected to outstrip those of entire countries.

“While ASEAN has been enjoying economic recognition in recent years, businesses tend to view it as a single entity and surprisingly, little is known about the many cities and regions that make up the archipelago,” said Patrick Dodd, Nielsen Growth Markets Group President.

“The diversity of its 625 million people represents a multitude of ethnicities, languages, and religion. This makes it crucial for companies to take a granular approach to understanding market opportunities in ASEAN. It’s time for companies to look beyond mega-cities to see the growth opportunity hot spots within middleweight regions,” he added.

Citicore Power secures service contracts for 5 hydro projects

RENEWABLE ENERGY company Citicore Power, Inc. (CPI) on Wednesday said it entered into service contracts for five hydro power projects in Luzon.
citicorepower

In a statement, the sister firm of listed Megawide Construction Corp. said the Department of Energy awarded the service contracts to CPI last May for each of its five pumped-storage hydro power projects.

CPI received the contracts — which authorizes a power generation firm to proceed with the pre-development stage of proposed projects — in June.

The company said 2,300-megawatt (MW) hydro power capacity is expected to be generated from the five plants, which will be spread across Southern Luzon.

“Citicore Power saw an opportunity to develop clean energy from renewable sources that will invigorate the country’s energy mix. Through the projects, the company aims to provide an answer to the increasing demand of power in the Philippines,” CPI Executive Vice-President for Commercial and Development Operations Manolo T. Candelaria was quoted as saying.

Aside from hydro power, CPI has an existing 100-MW capacity, which it exports to the national grid, from solar power projects. As of end 2016, CPI runs three large-scale solar farms in Bataan, Negros Occidental and Cebu provinces.

The company aims to install 1,000 MW of capacity using various renewable energy sources, including solar, biomass, wind and hydropower. — I.C.C. Delavin

How PSEi member stocks performed — July 5, 2017

Here’s a quick glance at how PSEi stocks fared on Wednesday, July 5, 2017.

How Philippine Stocks Performed — 070617

 

Removing VAT exemption on low-cost housing may crimp property market growth

THE residential market may experience a slowdown if the government’s tax reform plan, which removes tax exemptions on sale of low-cost housing, is approved, according to property consultancy Colliers International.

In a statement issued on Wednesday, Colliers International said House Bill 5636 or the “Tax Reform for Acceleration and Inclusion,” once passed into law, could add as much as P384,000 to the prices of low-cost housing due to the removal of value-added tax (VAT) exemptions.

Citing the approved bill, the property consultancy noted that VAT exemptions will be removed for the sale of residential lots valued at P1.92 million and residential houses valued at P3.2 million. Sale of socialized housing will also no longer be exempted from VAT once a housing voucher system is established.

While HB 5636 would increase government revenue collection by limiting VAT exemptions, Colliers said the removal of tax exemptions on low-cost housing would crimp the take-up rate of low-cost housing units, as well as make it harder for lower income families to own house and lots.

“Colliers believes that the increase is quite significant especially for starting families or new professionals,” Colliers’ Senior Manager for Research Randwil Dinbo U. Macaranas was quoted as saying in a statement.

Colliers noted 40% of the take-up rate of over 10,700 condominium units during the first quarter of 2017 came from the low-cost and socialized housing sectors.

At the current pace, pre-selling of residential lots in Metro Manila has increased by 5% annually in the last three years, with lots in neighboring provinces showing a slower growth at 1%.

RENTAL RATES TO RISE
At the same time, Colliers noted rental rates are likely to rise, as HB 5636 also removes the tax exemption for housing units leased out for less than P12,800 a month.

The property consultancy said vacancies in Metro Manila’s condominium market have already gone up at around 1% every quarter since the start of 2016. This is expected to rise as 49,000 condominium units are targeted to come online between 2017 and 2020.

“The planned imposition of additional taxes on residential leases will accelerate the on-going trend in the condominium market of rising vacancies and reducing rents,” Colliers said.

With the tax reform plan, Colliers said developers will have to craft more creative strategies on how to pre-sell their project and lease out ready-for-occupancy units. The trend of longer-term payments for sales and shorter-term leases will also continue in the residential market, the firm said.

“We see developers stretching the payment terms to a few more months to ease the burden of condominium buyers. Furthermore, many will be strengthening residential leasing teams to help keep them competitive in the rental market,” Mr. Macaranas said. — Arra B. Francia

Coconut oil exports up over 70% amid recovery from El Niño; prices rise

COCONUT OIL (CNO) exports in the first five months of the year rose over 70% year-on-year as production of copra, the raw material from which it is derived, recovered from the prolonged El Niño-induced dry spell last year, an industry association said.

coconut farmer
A farmer preparing coconuts to be made into copra in Hernani, Eastern Samar — AFP

Citing preliminary data, United Coconut Associations of the Philippines, Inc. (UCAP) Executive Director Yvonne T. Agustin said shipments in the January to May period hit 378,850 tons, up 70.20% from the same period in 2016.

Also, prices improved, averaging $1,544 per ton for the period, compared with $1,230 a year earlier.

“We are coming off a low base. So this year, the recovery is pronounced,” Ms. Agustin said in a phone interview on Wednesday.

The CNO subsector encountered difficulties sourcing copra early last year during the dry spell.

UCAP’s initial target for CNO export volume is 765,000 tons for 2017.

CNO exports totaled 726,827 tons in 2016, down 13.85% from a year earlier, she said.

CNO is used in the production of a range food and cosmetics products.

The Philippines is the top CNO exporter with Europe and the US its biggest markets. — Janina C. Lim

Floods slow Ivory Coast cocoa harvest agriculture flood floods Ivory+Coast cocoa harvest weather

HEAVY RAINS in Ivory Coast’s cocoa-growing areas are slowing the harvesting and sales of beans and farmers say they’re worried about black-pod disease rotting their crops.

Roads to plantations in the southwestern area of Meagui have been cut off after rivers overflowed and farmers can’t access their crops, which means they don’t know how the flowers and pods on the trees are developing, according to local grower Dongo Koffi.

“Everything is stopped at the moment,” he said by phone. “The sales have slowed down because we can’t harvest. Some farmers have some stocks of beans with them but they can’t sell them, because the roads aren’t accessible.”

While it’s still unclear whether Ivory Coast output will be materially affected, any losses due to the heavier-than-usual rainy season in the world’s top cocoa producer may help ease some pressure on prices, which have dropped by more than a third in the past 12 months amid expectations for a global surplus. The country, which is currently harvesting the smaller of two annual crops, is expected to produce a record amount this year.

Satellite imagery from the US Climate Prediction Center for June 22-28 suggests rainfall at or above normal across Ivory Coast. Year-to-date data from the National Meteorological Service through June 20 also showed an increase from 2016 in the Sassandra and San Pedro growing areas, as well as in the east.

Road access to the port of San Pedro was restored last month after roads and bridges connecting the region to the city were cut for about a week because of heavy rains, according to the prime minister’s office.

Cocoa for September delivery rose 1% to $1,960 a metric ton by 10:34 a.m. London time on ICE Futures US in New York, following a 4.3% gain on Friday.

Rains have been much more abundant than in June last year and farmers are concerned the wet weather will bring diseases like the black-pod rot, said Jean Kadjo, a grower in Niable in the east. Farmers surprised by the intensity of the rain haven’t been able to treat crops properly, while sales have slowed even for those smuggling cocoa across the border to Ghana in search of higher prices.

“In April and May, every week we could see about 10 trucks loaded with cocoa going through the city towards Ghana,” said Kadjo. “Now, there are about two of them.”

Farmers in Issia, in the center-west, have been able to tend to their crops including removing rotten pods, said Emile Yerpley Zadi. However, strong winds have torn some flowers off trees and the heavy rain is interspersed with overcast weather rather than sunshine, he said.

In Ghana, the second-largest producer, rainfall has been above normal in the cocoa growing regions, said Charles York, a meteorologist at the Ghana Meteorological Agency.

While trees are developing new flowers, farmers are concerned about some emerging signs of black pod disease, said Stephen Boakye, a chief farmer who supervises about 500 growers in Kibi, in the eastern region. Farmers have asked the Cocoa Board to quickly conduct another round of government-sponsored mass spraying “to avert a situation where we become victims of the blessing of rainfall,’’ he said. — Bloomberg

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