Ghana cocoa chief says concerned over Ivorian plan

01:39 p.m Jun 17, 1999 Eastern

By Annemarie Wyley

LONDON, June 17 (Reuters) - The head of Ghana's cocoa board said on Thursday he was very concerned that neighbouring Ivory Coast's plan to liberalise its cocoa market would lead to more spot sales, which could weigh further on already-battered world prices.

``There is a perception by the market that you cannot sell forward...spot sells invariably, but prices are not attractive,'' John Henry Newman, Chief Executive of Ghana's Cocoa Board and Chairman of the International Cocoa Organisation (ICCO) told Reuters.

Speaking on the sidelines of June 14-17 executive and finance sessions of the ICCO, Newman said should Ivory Coast begin selling spot because of this perception, it would lead to oversupply which could send prices tumbling.

He said for the moment Ghana was looking at Ivory Coast liberalisation as part of new global economic thinking.

``The issue is how it is managed so that it is not counterproductive,'' he added.

However, Newman said liberalisation, due to begin in October, would benefit the world's largest cocoa producer in the long term, and will see an end to government control over exports.

``It will mean the farmer will be paid a much, much higher price...in simple terms this is an advantage,'' he said.

On Thursday Guy-Alain Gauze, Ivory Coast's trade minister, said a senior Ghanaian delegation will visit the country on July 14 or 15 to discuss how the two countries can coordinate cocoa sales in the 1999/2000 (Oct-Sept) season.

Gauze said Ivory Coast would give priority to ``futures sales'' rather than spot sales, but gave no indication of how the government could achieve this in a liberalised market.

Boosting cocoa consumption, according to Newman, was the only way of turning around currently depressed global prices and higher offtake in Eastern Europe, Russia and Asia would aid the process as economies slowly got back on their feet.

``It is particularly depressing for us because 35 percent of Ghana's foreign exchange comes from cocoa. There is also an average of 22 percent tax paid on cocoa,'' he said, adding earnings from the commodity were so low that the government could no longer afford to pay farmers a decent price.

He said Ghana had to retain last year's price regime so farmers did not suffer unduly but reducing the 22 percent cocoa tax substantially would only impound on government revenue.

Newman also said he was apprehensive over a proposal by the European Union which suggested economic clauses should be done away with in a future global cocoa pact.

``Economic clauses have helped in some way to stabilise prices,'' Newman said, adding ``One is a little bit apprehensive about the possible fallout.''

The European Union said on Wednesday future international co-operation in the cocoa industry depended on a thorough review of economic measures in the form of production quotas.

The proposal said any future International Cocoa Agreement (ICA) -- the current one has been extended from end-September until 2001 -- should re-examine a key clause which aims to create equilibrium between world cocoa supply and demand but has come under fire for failing to get growers to meet annual output guidelines.