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Ringvorlesung Globale Güterketten University of Vienna 08.06.2010 Securing supplies in smallholder dominated GVCs: Private regulation of West African cocoa production. Niels Fold [email protected]. Content. Starting point: the issue of regulation ‘Cocoa basics’ Cocoa frontier dynamics - PowerPoint PPT Presentation
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Ringvorlesung Globale Güterketten University of Vienna
08.06.2010
Securing supplies in smallholder dominated GVCs: Private regulation of West African cocoa production
Niels [email protected]
Department of Geography & Geology
Content
Starting point: the issue of regulation‘Cocoa basics’Cocoa frontier dynamicsGovernance in the GVC for cocoa-chocolateMarketing systems in Africa (SMBs)- The quality issue- Ghana: a special caseEmergence of private regulation- The volume issue- Institutional innovationsUpgrading Conclusion - key themes
Department of Geography & Geology
Dimensions
1) Input/output structure
2) Territoriality
3) Governance structure• PDCs vs. BDCs (the role of lead firms)• Market, hierarchy, captive, modular, relational
4) Regulatory institutions• National and international• Public or private - ?• Internal or external - ?
Department of Geography & Geology
Cocoa basics (I)
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Cocoa basics II
Department of Geography & Geology
Department of Geography & Geology
Production and international trade patterns
Pronounced flow of beans from South to North- From production to consumption
Dominance of few countries - production and processing- Shifting importance of countries
Dominance of smallholders in production- The importance of Africa
Increasing processing capacity - in some producer countries
Regionalisation
Department of Geography & Geology
Titel: Figure 1. Exports of cocoa (SITC 072) to world (million US dollars), 1995-2008
0
500
1000
1500
2000
2500
3000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Nigeria
Côte d'Ivoire
Cameroon
Ghana
Source: COMTRADE (SITC, rev.3)
Department of Geography & Geology
Figure 2. Exports of cocoa (SITC 072) to world (million US dollars), 1990-2008
0
200
400
600
800
1000
1200
1400
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Brazil
Malaysia
Ecuador
Indonesia
Source: COMTRADE (SITC, rev.3)
Department of Geography & Geology
Figure 3. Share (%) of cocoa beans (SITC 0721) of total cocoa exports (SITC 072), 1990-2008
0
10
20
30
40
50
60
70
80
90
100
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Brazil
Malaysia
Indonesia
Côte d'Ivoire
Ghana
Source: COMTRADE (SITC, rev.3)
Department of Geography & Geology
Dynamics of global cocoa supply
The concept of ’forest rent’
Dynamics of cocoa frontiers (Ruf’s model)- Migration waves- Pest and diseases- Labour costs
’Hollowing out’
Competitive advantage of smallholder production
Critique: - Model does not include the role of lead firms
Department of Geography & Geology
Governance in the GVC for cocoa-chocolate
Concentration and centralisation
Brand manufacturers- food- chocolate
Contract manufacturers (grinders)- food- ’generic chocolate’
Vertical integration- downstream- upstream (domestic purchasing systems)
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Structure and actors in the GVC for cocoa-chocolate
Department of Geography & Geology
Cocoa marketing systems in Africa
SAPs – from the late 1980s- liberalisation and privatisation
Dismantling of state marketing boards- variations in scope- loss of quality control mechanisms
Problems with no quality control- traders increase speed of capital circulation- problem for all processors?
A special case: Ghana- state: fixed prices, export monopoly, QCD- private: LBCs, storage, transport
Department of Geography & Geology
Securing quality and volume: private regulation?Increasing prices (since 2006)
- the end of the ‘global frontier’? Supply problems- crumbling of public regulation (MB & ICA)
Provoking event: child labour in cocoa sector (West Africa)
New players in the organisation of global cocoa production- lead firms, business associations, civil society (NGOs)
Institutional innovations (ICI)- responsible labour practices- ‘sustainable’ cocoa production (increasing productivity)
Scaling up of ‘best practice’- organisational division of labour (role of WCF)- certification and verification (Governments & ICVB)
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Upgrading
Organisational learning(improvement of position of firms in GVC)
A) Sequence:• Assembly, OEM, (ODM), OBM
B) Forms:• Process• Product• Functional• Inter-sectoral
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Upgrading in agro-industrial value chains
1) Higher margins (unprocessed commodities)• Quality, volume, reliability, contracts, hedging
• Public action: new forms of marketing systems• Limitations: easy entry, mature technologies
2) Producing new forms of existing commodities• GMOs, customized raw materials
3) Localizing commodity processing• Intermediate and final processing
• Public action: export restraints, investments
Department of Geography & Geology
Conclusion: Key issues
New forms of global regulation- the role and nature of NGOs- the role of public funding
Driving forces for institutional innovations - rivalry and competition- capability for collective action in the GVC
Spatial impacts on cocoa smallholders - creation of ’certified spaces’- marginalised areas
Alternative model for state regulation?- adaptation of the Ghana cocoa system?
Department of Geography & Geology
Thank you!
