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Commodities Under Neo-liberalism: the Case of Cocoa

June 1, 2004

Irfan ul Haque

Abstract: The paper examines the case of cocoa as an illustration of the problems faced by primary commodity producers. The impact of market liberalisation within cocoa producing countries and industrial countries, the main consumers, on the cocoa price and cocoa farmers is examined. The paper shows that the market liberalisation cannot be held responsible for such improvements in productive efficiency as occurred over time, which was one of the two stated goals of these measure. Nor is there convincing evidence that the producer’s share in the export price increased, which was the other goal. A serious consequence of the preoccupation with market liberalisation, however, was that it diverted attention from the problems that are of main concern to cocoa producers, viz., the market volatility, low prices, and the producers’ share in the value chain. The paper then goes on to explore the kinds of action that might be considered to address these issues. It makes a case for filling the institutional vacuum that has been created as a result of the abolition of state marketing authorities in several cocoa producing countries. The paper attempts to show that the conditions are favourable for a cocoa producers’ alliance to emerge, which is desirable from the viewpoint of regulating cocoa supplies to prevent further price declines.

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