July 9 (Bloomberg) -- Ghana, the second-largest producer of cocoa, has brought the capsid-bug pest ``under control'' through a campaign of spraying trees with insecticide, according to the country's industry regulator.

``They don't pose much of a problem anymore in Ghana,'' K. Obeng Adjinah, head of Cocoa Disease and Pest Control at the Ghana Cocoa Board, or Cocobod, said in an interview yesterday in London. ``The capsid bug is under control.''

Cocoa rose to $1,800 a metric ton July 1 on London's Liffe exchange, the highest since at least 1989, partly on concern pests such as capsid would curb production in West Africa. Ghana has been expanding the area it sprays for the bugs and black-pod disease since it began paying for insecticide in 2001, and as it seeks to increase its crop 63 percent to 1 million tons by 2010.

Ghana's cocoa output fell 17 percent to 614,000 tons, or 18 percent of world production in 2006-07, because of a lack of rain, the International Cocoa Organization said on its Web site.

Black pod is a fungal disease that rots pods and beans and thrives in humid conditions, while capsid bugs feed on leaves.

``The area we are spraying against black pod is increasing every year,'' Adjinah said at presentation organized by Cocobod in London. ``Once it gets hold, it becomes endemic and you cannot eliminate it completely.''

Cocobod is also working on developing varieties resistant to swollen shoot disease, which can kill a tree in three years, along with ways to detect the virus that causes it more quickly. The virus is carried by the mealy bug, which has a waxy shell that repels insecticide, Adjinah said.

Swollen Shoot

``We are on course to solve it,'' said Henry Dzahini- Obiatey, who recently finished a doctorate on the disease at the U.K.'s Reading University after working for Cocobod since 1998. ``We have already identified which trees are resistant and which are tolerant,'' he said at the presentation.

Another approach is barrier cropping, involving planting a perimeter of disease-resistant crops such as citrus and oil palm around the cocoa trees to be harvested, Dzahini-Obiatey said.

Cocoa prices have also surged this year on rising demand for chocolate from emerging economies and increased fuel charges that pushed up farming, shipment and processing costs.

To contact the reporter on this story: Rachel Graham in London rgraham13@bloomberg.net.

Last Updated: July 9, 2008 11:24 EDT