Cocoa: Origin Differentials and the Living Income Differential

Christopher L. Gilbert ()
Additional contact information
Christopher L. Gilbert: SAIS Europe, Johns Hopkins University

The European Journal of Development Research, 2024, vol. 36, issue 4, No 2, 777-802

Abstract: Abstract Commercial transactions in the cocoa market are at prices based on the futures marker plus an origin differential. In July 2019, the governments of Côte d’Ivoire and Ghana announced a Living Income Differential (LID) of $400/ton to be paid as an additional component of the price. Analysis of realized prices for cocoa beans imported into the EU shows that, on average, the two producers obtained higher prices in the 2 years following the announcement, and that these increases exceeded both the increase in cocoa futures prices and the increase attributable to the tight physical market. The increases were shared by other origins and were passed through to higher producer prices. Origin differentials, which are determined in the broker market, subsequently declined to offset the LID. Although Côte d’Ivoire and Ghana are jointly responsible for 75% of world exports, they lack the means to limit production and are therefore unable to affect commercial transactions prices for more than a short period.

Keywords: Cocoa; Origin differentials; Living income; Côte d'Ivoire; Ghana (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1057/s41287-023-00612-x Abstract (text/html)
Access to full text is restricted to subscribers.

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:pal:eurjdr:v:36:y:2024:i:4:d:10.1057_s41287-023-00612-x

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/41287/PS2

DOI: 10.1057/s41287-023-00612-x

Access Statistics for this article

The European Journal of Development Research is currently edited by Spencer Henson and Natalia Lorenzoni

More articles in The European Journal of Development Research from Palgrave Macmillan, European Association of Development Research and Training Institutes (EADI) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().