Pass-through of cocoa prices along the supply chain: What's left for farmers in Côte D'Ivoire?

Gunther Bensch, Kathrin Kaestner and Colin Vance

No 1035, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: Cocoa farmers in Côte d'Ivoire face precarious livelihoods. Low farm-gate prices that are a fraction of the world market price compel land-extensive farming practices that perpetuate a cycle of poverty and environmental degradation. This paper seeks to understand the drivers of the low pass-through of cocoa prices in the world's largest cocoa-producing country and to identify potential inefficiencies and remedies. The analysis comprehensively covers price formation along all segments of the in-country supply chain. Our approach couples econometric analyses using secondary cocoa price data and primary farm household survey data with qualitative assessments of institutional factors specific to the cocoa value chain in Côte d'Ivoire. Notwithstanding the country's highly regulated system of setting cocoa prices, we do not find evidence for inefficiencies that would explain persistently low farm-gate prices. Nor do we find that the recently introduced ''Living Income Differential'', a price premium on internationally traded cocoa, has benefited farmers. We conclude by advocating for the international cocoa industry to strengthen its development programmes in cocoa-growing communities, complemented by government provision of infrastructure and other public goods. Such efforts can ultimately serve to increase the opportunity cost of cocoa production, drawing farmers into other employment sectors while improving the resilience and livelihoods of those who remain.

Keywords: Cocoa; pass-through; price; policy impact; value chain (search for similar items in EconPapers)
JEL-codes: O12 O13 Q11 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-afr, nep-agr and nep-dev
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/276233/1/1858916828.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:1035

DOI: 10.4419/96973204

Access Statistics for this paper

More papers in Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().