UG4004 - Cocoa Cartel: Analyzing Impact on Global Chocolate Market

This case study examines the 'Ghana-Ivory Coast Cocoa Cartel (COPEC)' and its potential to address the challenges faced by cocoa farmers. It explores the similarities and differences between COPEC and OPEC, focusing on COPEC's role in safeguarding farmers against fluctuating cocoa prices and oversupply. The study delves into sustainability themes, including the impact of population growth and urbanization on farmers' land rights, and analyzes the potential effects of premium cocoa pricing on the chocolate industry. It also highlights the importance of technology adoption, regulatory guidelines, and the role of central governments in supporting the cocoa cartel. Furthermore, the analysis contrasts COPEC with OPEC, emphasizing the need for a regulatory framework and addressing issues such as land ownership and deforestation. The study concludes by assessing COPEC's potential benefits for cocoa farmers, provided its barriers are effectively managed, and offers recommendations for technology adoption and farmer education. Desklib offers a platform for students to access similar case studies and solved assignments.

Case study: Cocoa Cartel
Stirs Up Global Chocolate
Market

Introduction
Will ‘GHANA-IVORY COAST COCOA CARTEL (COPEC)’ solve problems for cocoa
farmers?
 The study tries to find an answer to this question.
 COPEC is a union of Ivory Coast and Ghana for selling cocoa beans at
premium pricing

Methodology
 Based on the information provided in the case study
 The external resources will be used to add more weight to the
answers

Findings
Similarities and differences between COPEC and OPEC:
 COPEC like for OPEC is a union of two world’s largest producer of cocoa, Ivory Coast and Ghana (WSJ 2020)
 COPEC safeguards the cocoa farmers against challenges like fluctuating cocoa prices and oversupply of
cocoa (WSJ 2020)
 COPEC like for OPEC might have its nemesis in its farmers who do not know ways to respond to a
decreased demand (WSJ 2020)

Continues..
Sustainability theme:
 Population growth and urbanization have affected land rights of
farmers (WSJ 2020)
 Premium pricing for cocoa from Ivory Coast and Ghana will make Ice
Cream, Candy Bars, Biscuits and other baked goods pricier(WSJ 2020)
 This new cartel receives support from the U.S. three big candy
makers; Mars, Mondelez and Hershey WSJ 2020)

Continues..
 Living costs for farmers have steadily gone up despite the price
fluctuation of cocoa in the international market (Ingram et al. 2018)
 might perhaps provide a more stable income for the cocoa farmers
provided if the initiative really turns out the way as anticipated (WSJ
2020)
 The use of technology such as for cutting crops can be time-saving
and will also increase the farmers' productivity (De Figueiredo Silva et
al. 2019)
 The central governments of Ivory Coast and Ghana can educate
farmers on the technology (De Figueiredo Silva et al. 2019)

Continues..
 COPEC requires support in forms of regulatory guidelines for an
agricultural commodity
 According to Ghana’s Lands Commission, only less than 2% of the
cocoa farmers have legal rights to the land (WSJ 2020)
 Cocoa plants stop producing or become diseased after 30 years or so.
To begin with, replanting a cocoa tree, farmers need the permission of
the landowner that is mostly refused (WSJ 2020)

Continues..
 Cocoa farmers need to go through informal agreements with the
landowner before they can access the land (WSJ 2020)

Continues..
 The oral agreements between the farmers and the landowner result
in farmers clearing forests and thus begin farming. This results in
deforestation (WSJ 2020)

Continues..
Role of central governments:
 The development of economies would mean improved living
standards for its citizens
 However, the ‘Central Governments’ in the Ivory Coast and Ghana
should address the challenges of economic development
 degrading living standards of cocoa farmers living especially in these
countries is a challenge (WSJ 2020)

Continues..
 the farming sector has been that glittering for the farmers as it once
was. Hence, the role of the central governments would be of high
importance in ensuring that the cocoa cartel gets all the needed
support
 It is because this may certainly improve the earnings for the
farmers that they need to manage their growing expenses (Akinwale
and Folarin 2018)

Continues..
 One of the political risks can be
the growing urbanization of Ghana
and the Ivory Coast. Urbanization
results in increased deforestation,
which is both good and bad for the
countries in concern (WSJ 2020)
 The good thing is it generates
more land to support the
infrastructure development works
such as the construction of
residential spaces
 Conversely, it results in a
decreased number of plants that
are significantly important to
support the world in fighting
against global warming