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March 23, 2009

Ghana plans Commodity Exchange to steady food prices

by Emily Bowers

Ghana, the world’s second-biggest cocoa producer, will set up a commodity exchange to stabilize prices for farmers and steady food supplies in the West African nation, the Securities and Exchange Commission said.

The exchange, to be based either in the capital, Accra, or the second-biggest city, Kumasi, may be established next year, Emmanuel Ashong-Katai, head of research and market development at the Accra-based commission, said in an interview on March 20.

The market would enable farmers to “get a better price and a more stabilized income,” he said. Farmers could also spread out the sale of their crops through the “lean season,” meaning fewer food shortages, Ashong-Katai said.

Rising prices for staple crops, including corn, rice and soy, pushed Ghana’s annual inflation rate to a five-year high of 20.34 percent in February, the country’s statistical service said March 13.

“We are very rich in minerals and agricultural resources, yet these sectors remain very poor because agriculture is not well-organized in this country,” he said.

A yearlong feasibility study, funded by the World Bank at a cost of about $200,000 and conducted by the U.K.-based Natural Resources Institute at the University of Greenwich, will be completed next month. After that, the commission will use another World Bank grant of $200,000 to develop laws to govern trading.

The exchange would trade crops that have a longer shelf life, including rice, corn, soybeans and sorghum. Cocoa may also be eventually added to the list of commodities traded, Ashong- Katai said.

Ghana ranks behind neighboring Ivory Coast as the world’s biggest cocoa producer. Exports of the commodity, which is used to make chocolate, are controlled by the state, which fixes the price farmers are paid at the start of each annual harvest.

Bloomberg

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