Government officials in Malaysia, amajor cocoa producer, have declined to say whether it will join
the International Cocoa Agreement (ICCA) for which buffer stock
rules were agreed in London last week.
    Ministry of Primary Industries officials said in January
the cabinet would decide on Malaysia's participation, but so
far a decision has not been announced. The government is said
to be in favour of joining the pact, but local cocoa growers
and traders told Reuters they are against the idea because
certain provisions in it may be to their disadvantage.
    Malaysia is the world's fourth largest cocoa producer. The
government feels that the pact, through its buffer stock
mechanism, can help stabilise prices in a market which is
labouring under surpluses, officials said.
    But growers and traders are concerned Malaysia's
participation in the pact will require them to pay a levy for
exports of cocoa to non-member countries of the ICCA.
    They estimate the levy at around 100 ringgit a tonne at
current prices and said they are not prepared to accept it
because a big portion of Malaysia's cocoa exports, officially
estimated at 112,000 tonnes in 1986, goes to non-members.
    Most growers and traders added they are also against a
buffer stock measure under the agreement which requires
withholding of cocoa stocks when prices slump.
    Malaysia, which produced 117,000 tonnes of cocoa last year,
might be forced to withhold up to 70,000 tonnes worth some 30
mln ringgit under such a measure in the long-term, and this
might affect their economic viability, they said.
    "The cost of maintaining such a stock can be high and it
will be a real messy business for the government and the trade
if it ever occurs," an industry source said.
    The growers and traders also said that under new buffer
stock rules Malaysia can continue to benefit even if it is not
a member of the pact, as the buffer stock manager is also
allowed to buy from non-members for the stockpile.
    Under the new rules purchases from non-members, such as
Malaysia, will be limited to 15 pct of the total stock.
    Malaysia has come under pressure from some producers to
join the pact soon, officials said, but they noted that it need
not rush to do so as there are provisions which allow countries
to join the agreement even at a later date.
 REUTER
