Ghana plans to build up cocoa reserves

ACCRA, Feb 28 (Reuters) - Ghana plans to build up reserves of cocoa beans to take advantage of future price rises, rather than selling beans ahead of the harvest and missing out on any potential foreign exchange earnings.

Ghana's Finance Minister Yaw Osafo-Maafo said on Thursday in his budget speech to parliament he expected the production and marketing of cocoa, the West African country's second biggest foreign exchange earner, to grow by 2.2 percent this year.

"The rise in cocoa prices is reassuring. But the gains to us were rather modest because of the forward sales of our crop before the rise began in late 2002," Osafo-Maafo told parliament in the world's third biggest cocoa grower on Thursday.

"In 2003 we must use any price gains to improve on the producer price for farmers and to build up reserves to be in a position to stabilise domestic producer prices."

International prices surged at the end of 2002 after war broke out in Ivory Coast, and the minister said Ghana had learnt its lesson from forward sales.

"We've adjusted our strategy in order to benefit from increasing world market price for cocoa," he said.

Ghana expects to produce 390,000 tonnes of cocoa in the 2002/03 season, up from 340,000 in the previous season. Neighbouring Ivory Coast is the world's biggest cocoa grower with a crop of about 1.2 million tonnes each year.

Ghana's leading foreign exchange earner ahead of cocoa is gold but the finance minister said he was not optimistic that the rally in the price of gold would endure.

"The price recovery of metals and minerals is not expected to be strong unless there's a significant rebound in the global economy. The good news is that rising price trends may stimulate investment in exploration and strengthen our output prospects in the future," he said.

Five mining companies are expected to begin construction on new mines this year after the authorities granted them licences to mine for ore located in forest reserves. Ghana is Africa's number two gold producer behind South Africa and ahead of Mali.

Ghana's economy grew 4.5 per cent in 2002, in line with its target, and it has predicted 4.7 percent gross domestic product growth for 2003, compared with a World Bank's estimate of 3.2 percent for sub-Saharan Africa.