COCOA BUFFER STOCK ACCORD CLOSER, DELEGATES SAY
The International Cocoa Organization
(ICCO) moved closer to an agreement on buffer stock rules, with
many delegates saying they expect to reach an accord by Friday.
    "Everyone is convinced the buffer stock rules should be in
place by Friday so the buffer stock can be put into operation
Monday," a consumer delegate said. "The atmosphere is excellent."
    Other delegates said the buffer stock might not be
operational by Monday but could be in place by around April 1,
if the rules are agreed by Friday.
    A detailed package on how the buffer stock manager will buy
and sell cocoa was presented to a buffer stock working group
this afternoon -- a big step toward a "very interesting stage of
negotiations," delegates said.
    The package, based on negotiating principles informally
agreed by delegates, has been forged bit by bit during
fortnight-long meetings by ICCO Executive Director Kobena
Erbynn and a small group of other delegates.
    Producers, the European Community (EC) and consumers are
scheduled to consider the paper separately and then jointly
tomorrow.
    Under the proposal, the buffer stock manager would buy
cocoa from origins or the second-hand market on an offer
system. He would alert the market via news agencies as to when
he wanted to buy cocoa and include shipment details and tonnage
desired, delegates said.
    The manager would buy cocoa on a competitive basis, rather
than choosing the cheapest cocoa as before, giving preference
to ICCO member-country exporters. Standard price differentials
would be fixed for each origin, similar to golf handicaps, to
determine the relative competitiveness of offers of various
cocoas from different origins, they said.
    The differentials could be reviewed at the request of a
member country or recommendation of the buffer stock manager,
the delegates said. Revision would be decided by a majority
vote of the ICCO council.
    Buffer stock purchases from non-ICCO member countries would
not be allowed to exceed 10 pct of the total buffer stock, they
said.
    The purchases would be limited to 5,000 tonnes of cocoa per
day and 20,000 tonnes per week, and could be bought in nearby,
intermediate and forward positions, they added.
    One of the underlying ideas of the rules package is
"transparency," meaning virtually all the buffer stock manager's
market activities will be public and he will have as little
discretion as possible, delegates said.
    After the tin market collapse in 1985, when the
International Tin Council buffer stock ran out of funds, cocoa
delegates are anxious to install safeguards in the cocoa market
mechanism, they said.
     Earnest debate on the buffer stock proposal is expected to
begin late tomorrow, as delegations feel the pressure of the
approaching Friday deadline, when the ICCO meeting is due to
adjourn, delegates said.
    The ICCO failed to agree buffer stock rules in January when
the new International Cocoa Agreement came into force. The
existing buffer stock of 100,000 tonnes of cocoa was frozen in
place with its bank balance of 250 mln dlrs -- both untouchable
until rules are agreed.
     Though the current semi-annual council meeting is not the
last chance for delegates to cement buffer stock rules,
producers are keen to get the wheels of the market-stabilizing
mechanism turning to stem the decline in world prices,
delegates said.
 Reuter
