(Adds quotes, details)
ACCRA, March 20 (Reuters) - Ghana’s government has called off plans to cut how much it pays cocoa farmers and will look at other ways to address volatile market prices, Senior Minister Yaw Osafo-Maafo said on Tuesday.
In January, the world’s second largest cocoa grower said it would consider pegging farmer prices to 70 percent of the world market price to protect the country’s finances.
“We won’t do it ... It has been looked at and the decision is that we would not do it,” Osafo-Maafo told Reuters on the sidelines of a meeting between West African cocoa regulators and international lenders in Accra.
Ghana’s regulator Cocobod currently pays farmers 7,600 cedis per tonne of cocoa - the equivalent of about 83 percent of world market prices - leading to a budget deficit of 2 billion cedis.
“We believe we can make savings from other areas to make up for the deficit ... We are exploring new strategies,” Osafo-Maafo said, without giving further details.
A sharp drop in commodity prices in 2015 heavily impacted the cocoa industry, forcing top grower Ivory Coast to slash prices last year. But Ghana has been reluctant to follow suit.
The two countries, which together produce over 60 percent of the world’s cocoa, are seeking a $1.2 billion loan from the African Development Bank (AfDB) to build storage facilities in an effort to build up buffer stocks and boost processing.
Osafo-Maafo said this initiative was needed to have an influence on market prices.
“Cocoa is not like oil where you can just turn off the taps as we’ve seen with OPEC members. So the only way is to create buffer stocks in order to control what is coming out to the market,” he said.
A dozen international lenders including Citibank, First Rand and China Development Bank attended Tuesday’s meeting, organised by the AfDB to pool funding for its loan to the cocoa sector.
Reporting by Kwasi Kpodo Editing by Sofia Christensen and David Evans