RI shies away from joining cocoa organization

RI shies away from joining cocoa organization

LONDON (Reuter): Indonesia, the world's third largest cocoa producer, is again fighting shy of suggestions that it join the International Cocoa Organization (ICCO) because it opposes output cuts that might hurt its small farmers.

"Each time there is an ICCO meeting, we will be asked if want to join them," an Indonesian official told Reuters on the sidelines of a London meeting of the ICCO, a producer/consumer group.

"Our position remains the same. We still have no plan to join it. It's hard for us to implement its management plan because about 70 percent of our cocoa belongs to small farmers," said the official, who declined to be identified.

Indonesia attended the meeting of the London-based ICCO as an observer.

Cocoa producers agreed in September to cut output by a total of 90,000 tons over three years starting in 1996/97 to realize a stocks/consumption ratio of 34 percent from around 50 now.

The official said production cuts would be detrimental to the Indonesian farmers because the country was in favor of more production to boost their income.

"Implementing production cuts will mean cutting their (farmers) throats. For the time being, we don't have any plan to join the ICCO," he said.

"Maybe we will join them when the time has come," he said without giving further details.

Government officials in Jakarta have said Indonesia has have been wary of joining the organization for fear it might want to limit the country's production if prices decline.

Indonesian Cocoa Association (INCA), on the other hand, was in favor of joining the group.

ICCO estimated last month Indonesia's cocoa production in the 1995/96 (Oct-Sept) to be 295,000 tons, making it the third largest producer after the Ivory Coast and Ghana.

But Asian cocoa traders believed Indonesia's cocoa bean output may expand to between 400,000 to 500,000 tons over the next few years, which should allow it to overtake Ghana as the world's second largest producer by the year 2000.

ICCO's estimation put Ghana's 1995/96 crop season at 400,000 tons, while Ivory Coast's out is expected to hit 1.2 million tons.

The Indonesian official said he shared the traders' optimism his country would overtake Ghana sometime in the future.

"There are always possibilities that our rank will be higher in the coming years," he said.

When asked if Ghana planned to retain its position, John Henry Newman, the executive director of Ghana Cocoa Board said at the sidelines of the ICCO meeting:

"For me, the bottom line for the Ghana Cocoa Board to supervise an industry which will continue to help generate wealth for Ghana."

Postpone

Cocoa nations were winding up London talks on Friday but a key decision on how to share the money raised by lucrative buffer stock sales was postponed.

"We have been discussing this for a year and all we could agree to is that a reserve fund is useful," said Tim Mordan, the UK delegate and the chairman of the ICCO executive committee.

The three-day International Cocoa Organization (ICCO) session also looked at the possibility of honing the accuracy of stocks which provide the platform for planned production cuts.

Consumer and producer members then reviewed progress made in a major tree-stock project which will be presented to the Common Fund for Commodities and secured the initial funding for a new environmental project.

But a decision on using the buffer stock profits to set up a special reserve fund was blocked by Brazil which has already promised the money to the fight against witches' broom -- a cocoa killer that has ravaged its crop in the last few years.

"We have a legal problem there. We have committed the money to research into the witches' broom disease," said the Brazilian delegate Genesio Almedia. "We have to choose between funding the organization or the witches' broom," he told reporters.

A decision has to be made by March and delegates were likely to settle for a fund of three million sterling ($4.9 million) after producers threw their weight behind a figure between 3-4.3 million ($4.9-7.1 million), edging closer to consumers' ideas.

Producers were previously backing the ICCO executive director Eduard Kouame who favours a larger fund of 5-6 million sterling ($8.2-10 million) to generate more interest income for the group's activities.