Sustainability winners and losers in business-biased cocoa sustainability programmes in West Africa

In cocoa farming forestland is a production factor. Cocoa planting is easiest and production costs are lowest in tropical forest. Historically, therefore, once forestland has been exhausted in a given geographical area planters tend to diversify into other production systems to avoid the poverty (induced by increasing factor cost) of post-forest cultivation. In modern times however cocoa planters exist in a value chain and post-forest diversification could threaten multinational companies relying on rural planters for their raw material. In 2014 ten of the world’s largest chocolate multinationals combined, with more than $500 million in funding, to introduce a cocoa sustainability scheme called CocoaAction. In principle, CocoaAction and similar sustainability schemes sponsored by western multinational chocolate companies are interventions to empower cocoa planters and planting communities in West African countries. But in practice, as this article will show, these schemes are a response to diminishing returns in cocoa-producing communities and the prospect of diversification, and the resulting projection of a shortage in raw material. There are signs that diversification away from cocoa will be beneficial to cocoa planters and their communities. Cocoa sustainability schemes are therefore designed for the benefit of multinational chocolate companies and at the expense of diversification in West African countries.     

Global Restructuring and Liberalization: Côte d ’Ivoire and the End of the International Cocoa Market?

The restructuring of the world cocoa market has concluded with the liberalization of the sector in the world's leading producing country, Côte d'Ivoire, clearing the way for domination by an oligopoly of global companies. This paper describes how Côte d'Ivoire's share of world production created an illusion but not the reality of market power. In the 1990s, in the wake of failed attempts to influence the world market, the Ivorian cocoa sector experienced a series of upheavals that were both pivotal to broader changes in the global market and a refiection of them. The converging strategies of new Ivorianfirms and of the major global grinding companies resulted in increased vertical integration in Côte d'Ivoire, exemplified in the development of 'origin grinding '. Later, financial difficulties encountered by Ivorian firms led to global companies taking control. Amongst the results of these changes are a decline in the role of traders, a redefinition of the relationship between grinders and chocolate manufacturers, and a standardization of cocoa quality around an average 'bulk' level. This signals the end of 'the producing countries' and of the global market.     

Industrial upgrading and development in Lesotho’s apparel industry: global value chains,foreign direct investment,and market diversification

Many low-income countries are integrated into apparel global value chains through foreign direct investment (FDI), including Lesotho, which has become the largest Sub-Saharan African apparel exporter to the US under the African Growth and Opportunity Act. More recently, South Africa has emerged as a new apparel export market in Lesotho. The two markets are supplied by different types of FDI firms – affiliates of Taiwanese transnational producers and South African manufacturers – which are part of different value chain variants. The paper assesses the implications for industrial upgrading and development of integration into these two value chain variants in Lesotho, drawing on firm-level and institutional interviews. We show that their different characteristics in terms of investors’ motivation, governance structure, end markets, firm set up and most importantly and causally, ownership and embeddedness have crucial impacts on functional, product and process upgrading, local linkages, and skill development.     

Country of Origin Effect for Food Products from Developing and Transition Countries: A PLS Analysis of German Consumers’ Perception

ABSTRACT

This study investigates the importance of the country of origin (COO) effect in German consumers’ perception of chocolate quality using the example of chocolate made from Ecuadorian raw cocoa. From earlier COO and consumer perception research, a complex research framework grounded in schema and attribution theory has been developed acknowledging the multifactorial character of consumers’ food quality perception. Based on this framework, a PLS analysis of primary data from an online survey of 205 German chocolate consumers is conducted. The results demonstrate the overall applicability of the research framework and give evidence on the underlying complex consumer perception process of COO-labeled food products. For the case of chocolate made from Ecuadorian cocoa, PLS estimations show a strong COO effect in German consumers’ quality perceptions and identify characteristics of the target consumer group. Protecting geographical indications may offer a potential for products from developing and transition countries to differentiate in the German market, a prime example for European markets, and should be promoted more strongly by government offices and NGOs.     

Farmers’ perspectives on climate change manifestations in smallholder cocoa farms and shifts in cropping systems in the forest-savannah transitional zone of Ghana

The study was conducted to explore actual manifestations of climate change in smallholder cocoa farms to aid extension response to climate impacts, and to understand the reasons for a renewed interest in cocoa production in the forest-savanna agro ecological landscape in Ghana, in spite of unfavorable climatic conditions. Two hundred cocoa farmers were interviewed in nine cocoa farming communities. Selected farms were also visited to document on-farm manifestation of climate impacts as well as innovations and strategies farmers are employing to respond to the adverse impacts of climate change on their cocoa systems. The results revealed various manifestations of climate impacts on cocoa farms which included, increased incidence of pests and diseases, wilting of cocoa leaves, high mortality of cocoa seedlings which affected expansion and farm rehabilitation, and wilting of cherelles resulting in low yield. The farmers maintained that their response to the immediate impacts of climate on cocoa was a shift to cereals due to the unpredictable climatic patterns and the shortened duration of rainfall. However, a combination of storage and supply chain challenges and low returns from cereal production, coupled with land scarcity in the Western Region, where most of them are migrant farmers accounted for their decision to return to cocoa production lately. It was observed, among other adaptive responses, that some farmers plant about three times the plantain suckers they usually plant, to provide a dense temporary shade over cocoa seedlings, and resort to planting more cocoa seedlings randomly per unit area on new farms, contrary to recommended planting approach, as a form of insurance against seedling mortality. More importantly, a community-based fire response system was identified to be a major safeguard mechanism to the threat of fire. Clearly, the farmers are not replanting cocoa in the forest-savanna agro ecological landscape because it is more productive than cereals, but they believe that a low yielding cocoa is far better than a productive cereal cropping systems that offer low returns when compared to cocoa. The study brings out the sustainable livelihood challenges of the rural farmer within the context of a changing climate for appropriate policy response.     

Global Commodity Chains and African Export Agriculture

The last twenty years or so have seen a new conjuncture in international trade in tropical agricultural products. That conjuncture combines both changes in the organization of the (Northern) manufacturer and consumer segments of the global commodity chains for those products, and in marketing arrangements in their (Southern) countries of origin, associated with structural adjustment and liberalization. This introductory essay provides the context for the case studies that follow, first by introducing some of the key concepts and analytical issues in the global commodity chain (GCC) approach and other recent relevant literature such as the French 'convention' theory. It then sketches an historical framework for examining international trade in tropical agricultural products, with brief illustrations of the specific trajectories of Africa and some African countries within that framework. Finally, it shows how a number of issues are explored in the case studies presented, including how current changes might affect the future prospects of smallholder ('peasant') production of tropical export crops.     

Global and local food value chains in Africa: A review

The rapid expansion of agrifood exports from low- and middle-income countries and the contribution of global value chains to rural development are well-documented in the literature. Also, studies on modernization of domestic food value chains in these countries are emerging. Yet, the linkages between global and local value chains are rarely studied. On the one hand, the development and expansion of global value chains may create competition with local value chains for land, labor, water, soil nutrients, and other resources. On the other hand, positive spillover effects, such as investment, technical or institutional spillovers, may occur and spur the development of local value chains. In this article, we put forward a conceptual discussion on the type of linkages between global and local value chains, and how these depend on crop and value chain characteristics. We review the empirical evidence on these linkages. Our focus is on Africa, where agrifood exports and global value chains evolved rapidly and where challenges remain to upgrade and increase efficiency in local food value chains.     

Trade Preferences for Developing Countries: An Analysis of Canada's Trade with the Caribbean Basin

This paper analyzes the potential impact of Canada's newest trade preference agreement with the Caribbean Basin. The analysis shows that overall static trade expansion gains are limited to £536,000 per year and are confined to a narrow range of commodities. Greatest potential is found to exist in fresh vegetables, cocoa and chocolate products and sauces. The analysis also shows that more than 87% of the gains from trade expansion will redound to the benefit of Jamaican entrepreneurs.     

Land distribution and acquisition practices in Ghana's cocoa frontier: The impact of a state-regulated marketing system

Substantial differences in the size of landholdings among cocoa farmers in the Western Region – the last cocoa “frontier” in Ghana – are primarily a result of inheritance practices and the purchase of vast tracts of land by migrants in the initial period of the cocoa boom. Individual accumulation of land over the last decade has mainly taken place via inheritance (among indigenous farmers) without takeovers of land and dispossession of small-scale farmers outside the extended family. Land accumulation among migrant farmers is rare beyond the initial acquisition. Large-scale farmers transfer surplus from their higher volume of cocoa production into investments in non-farm activities and construction of new residential houses—and not in land acquisition based on market transactions. State regulation of the cocoa sector has spurred increased efficiency among private cocoa purchasing companies and thereby reduced the marginalization of farmers with small landholdings by preserving their access to a vital source of income. The unique character of the Ghanaian purchasing system is a major factor behind the relatively stable proportion in the access and control of land for cocoa between extended families.     

Enhancing Access to the Global Food Manufacturing Value Chain: The Role of a Food Safety Technical Regulation in Ghana

Demonstrating compliance with food safety requirements of the global food economy is a prerequisite for access. This article presents an overview of the governance within global value chains and their impact on the prospects of developing countries accessing and participating in the global food manufacturing value chain. Based on fieldwork undertaken in Ghana, the article investigates the issues that hinder compliance of the Ghanaian food manufacturing sector with the basic requirements of food safety and investigates the potential role of a technical regulation in enhancing compliance, and therefore participation, in the global food manufacturing economy.     

Property rights, production technology, and deforestation: cocoa in Cameroon

In this article, we use a vintage‐capital model with risk of eviction to assess cocoa farmers' response to changes in their tenure security and to the introduction of a new, faster‐maturing cocoa variety. The model is calibrated with data from Cameroon in calendar year 2000, and then used to simulate the effects of institutional and technical change on farmer welfare and deforestation rates. Our findings can be summarized in three points. First, improved tenure security over cocoa fields increases farmers' consumption and welfare, but at the expense of more deforestation. Second, the introduction of new cocoa varieties with faster maturity and higher input response also unambiguously raises farmers' consumption and welfare. Doing so increases deforestation under insecure land tenure, but slows down deforestation under secure land tenure. Third, when introducing the two innovations together (more security and also new varieties), there is both an increase in welfare and a decline in deforestation. In sum, the availability of new cocoa cultivars calls for stronger tenure security, to accommodate investment in the new technology without increasing deforestation.     

Reforms,globalization, and endogenous agricultural structures

In this article, I draw lessons from two quasi‐natural experiments (the transition process in former Communist countries and the rapid globalization of food chains) on the optimality of farms and agricultural structures more generally. I argue that (a) the farm structures that have emerged from the transition process are much more diverse than expected ex ante; (b) this diversity is to an important extent determined by economic mechanisms which are influenced by initial conditions and reform policies; (c) non‐traditional farm structures have played an important role during transition because they were optimal to address the specific institutional and structural constraints imposed by the transition process; (d) there is more diversity than often argued in the farms that are integrated in global food chains; (e) endogenous institutional (contracting) innovations in food chains may lock existing farm structures in a long‐run institutional framework; and (f) indicators based on farm structures are not a good measure of welfare effects of the globalization of food chains.     

Governing the Organic Cocoa Network from Ghana: Towards Hybrid Governance Arrangements?

In this paper, we examine the processes of initiation, construction and transformation of the organic cocoa network from Ghana. We address in particular how the state responded to and engaged with civil‐society actors in the organic cocoa network and to what extent state involvement reshaped state–business–civil society relations? While most of the literature argues that globalization and liberalization processes weakened the state's position as key player in the development and management of agro‐food networks, the case of the (organic) cocoa sector in Ghana is often depicted as an exception because of the strong position the state still occupies in it. Employing a global commodity network perspective to analyse the Ghanaian organic cocoa case, this paper demonstrates that although the state is still a major player in the contemporary (organic) cocoa network, some hybrid governance arrangements, involving state, transnational and national NGO networks, and businesses, are emerging. The organic cocoa network also prompted a double process of ‘dis‐ and re‐embedding’ at the local level that helped shape and strengthen the organic cocoa network.     

Impacts of socio-economic policies on agriculture in the mountainous upland of the Dalinghe river watershed,Northeast China

Ghana, as the second largest global producer of cocoa, is strategically positioned on the world market. Consumer concerns over ethical and environmental issues associated with cocoa production are a potential threat to its position. These concerns have given rise to certification. Certification dictates the way cocoa can be produced and consequently affects producers’ incomes and environmental services. The expected profitability, yield, and environmental impact of Rainforest Alliance certified shade-grown cocoa production (RA-Cocoa) is estimated and compared to an extensive shaded production system (Ext-Cocoa) and an intensified full sun production system (High-Tech). Ext-Cocoa represents most cocoa production systems in Ghana, while High-Tech is promoted by the government as a tool for attaining its target output of 1 million tons. Under the baseline assumptions High-Tech was the most profitable; RA-Cocoa generated positive returns, while Ext-cocoa was a break even proposition. Simulation of different policy scenarios did not affect the rank order of the baseline outcome. The Ext-Cocoa yield was 28% of the RA-Cocoa yield, which was 78% of the High-Tech yield. The environmental services maintained at the plot level of RA-Cocoa production system are greater than those of the High-Tech production system. However, the 228,000 ha of additional forest land required to produce 1 million tons with RA-Cocoa questions which system would impact environmental services the least.     

Measuring Distortions to Agricultural Incentives for Value Chain Analysis: Evidence from Indian Value Chains

We extend the nominal rate of protection (NRP) methodology to a value chain framework. We develop our methodology for three types of value chains: a new value chain created by policy, a value chain in which a by‐product is created in the processing of a commodity, and a value chain in which processing of a commodity generates new product(s). We consider two cases of value chains: when the commodity is tradable and when it is non‐tradable. The proposed indicator, value chain NRP, allows policy‐makers to see an aggregate measure of all policy impacts on all the commodities and products in the value chain, normalised at the farm level. We apply the methodology to selected value chains in India. Our results indicate that farmers are subsidised, but at different rates. Both sugarcane producers and sugar producers are protected, but sugar producers are protected at higher rates. Producers of downstream products such as ethanol and molasses are taxed, whereas the crushing industry is subsidised. We observe that there is increasing protection along the value chain from commodity to product for the oilseeds sector, whereas the picture is less clear for the sugarcane value chain.     

Cocoa pricing options and their implications for poverty and industrialization in Ghana

This study establishes the cocoa pricing subsidization options that will stabilize processors’ throughput while meeting the multiple, but possibly conflicting, public policy objectives of maximizing government revenue and reducing poverty among Ghanaian cocoa beans producers. To evaluate these options, we construct and numerically simulate a structural dynamic stochastic model of a representative cocoa processor who maximizes the present value of current and expected future profits, given prevailing market conditions and cocoa pricing policies. Our results indicate that, given current processing capacity, the Ghana Cocoa Board would have to offer a 92% discount to processors on main‐crop beans in order to achieve the industrial goal of locally processing 40% of annual production. This would cause light‐crop beans used in processing to be completely displaced by main‐crop beans carried over as inventory. It would also increase mean processor revenues by 167%, but cause the Ghana Cocoa Board to operate at a significant deficit, implying that the stated goal could only be achieved through massive government subsidies.     

Brewing a Bitter Cup? Deregulation,Quality and the Re‐organization of Coffee Marketing in East Africa

To what extent is global economic change mediated by national‐level policies? Are global corporations adopting the same strategies in different countries or do they address varying local circumstances in different ways? Do governments in developing countries have any meaningful regulatory powers left? This paper seeks to address some of these issues by examining the dynamics of coffee‐market reforms in three East African countries against the background of recent restructuring of the global coffee‐marketing chain. The paper focuses on two relatively neglected areas of inquiry: (1)changes in the identity, market share and organization of the actors involved in commodity markets and their contractual/power relationships in the marketing chain; and (2)changes in the assessment, monitoring and valuation of quality parameters in commodity trade. The author highlights the consequences of different trajectories of domestic market reforms and considers whether the preservation of quality and reputation is possible in deregulated markets.     

Comparing supply‐side specifications in models of global agriculture and the food system

This article compares the theoretical and functional specification of production in partial equilibrium (PE) and computable general equilibrium (CGE) models of the global agricultural and food system included in the AgMIP model comparison study. The two model families differ in their scope—partial versus economy‐wide—and in how they represent technology and the behavior of supply and demand in markets. The CGE models are “deep” structural models in that they explicitly solve the maximization problem of consumers and producers, assuming utility maximization and profit maximization with production/cost functions that include all factor inputs. The PE models divide into two groups on the supply side: (1) “shallow” structural models, which essentially specify area/yield supply functions with no explicit maximization behavior, and (2) “deep” structural models that provide a detailed activity‐analysis specification of technology and explicit optimizing behavior by producers. While the models vary in their specifications of technology, both within and between the PE and CGE families, we consider two stylized theoretical models to compare the behavior of crop yields and supply functions in CGE models with their behavior in shallow structural PE models. We find that the theoretical responsiveness of supply to changes in prices can be similar, depending on parameter choices that define the behavior of implicit supply functions over the domain of applicability defined by the common scenarios used in the AgMIP comparisons. In practice, however, the applied models are more complex and differ in their empirical sensitivity to variations in specification—comparability of results given parameter choices is an empirical question. To illustrate the issues, sensitivity analysis is done with one global CGE model, MAGNET, to indicate how the results vary with different specification of technical change, and how they compare with the results from PE models.     

Co-integration and error-correction modelling of agricultural export supply in Cameroon

Estimates of factors influencing Cameroon^,s exports of cocoa, coffee and cotton are derived in a system of equations using the Engle-Granger and Johansen co-integration and error-correction representation procedures. Two co-integrating vectors involving cocoa and coffee exports as endogenous variables are identified in the system while tests for exogeneily of cotton exports are consistent with the independence of cotton from the other two commodities. These findings are corroborated by estimates of a restricted error-correction model which lead to acceptance of the hypothesis that cocoa and coffee exports are-indeed determined endogenously to the system and not linked to cotton exports. Statistical significance of the error-correction terms for cocoa and coffee validates the existence of an equilibrium relationship among the variables in each of these co-integrating vectors. The combined short run dynamic effect of lagged quantities of cocoa and coffee, export/domestic price ratio and GDP jointly explain changes in exports of cocoa whereas lagged quantities exported do not seem to have a significant short-run dynamic effect on changes in coffee exports.     

The Interaction of Global Value Chains and Rural Livelihoods: The Case of Smallholder Raspberry Growers in Chile

This paper integrates aspects of global value chain and sustainable rural livelihoods analyses in an exploration of the local impacts of agri‐food globalization in Chile. In particular, it examines the evolution of the raspberry export sector in the context of Chile's non‐traditional agricultural export boom, and considers its importance to smallholder growers and rural households in central Chile. The paper first outlines the geography and structural configuration of the global value chain for Chilean raspberries, and considers modes of governance and forms of coordination between key actors within the chain. Second, the terms and implications of smallholder grower participation in the value chain are explored in a discussion of access to key livelihoods assets. The paper concludes that institutional support to smallholders, even in the case of a crop that is widely seen to have a small‐scale ‘size bias’, remains integral to their capacity to comply with required safety and quality standards and gain and retain market access via the value chain.