The history of cocoa in West Africa goes back to late 1800’S where it was grown in the Western parts of the Ivory Coast, close to Liberia, but it did not capture the attention of colonists until two decades later.(1) One of the many colonial legacies is that a lot of African countries inherited economies that relied heavily on the exportation of one commodity. Ivory Coast, for example, has become the leading producer of cocoa and it accounts for more than 15% of its GDP. While this is not necessarily a negative thing in itself, such a narrow economic base places the country at risk of volatile world prices and spillover effects from foreign markets that linked to cocoa. In article featured in Africa Business, early March 2019, the author notes that “between September 2016 and February 2017, the cocoa Barometer for 2018 reported that the global market price declined steeply, with a tonne of cocoa…declining from $3000 to $1900.”(2) This was a result of many factors including the lack of domestic infrastructure to store cocoa beans in season of high yield and less demand. This results in pressure to sell all the beans from one season before they go bad and the farmers have to throw them away.(2) Expectedly, farmers and labor workers who work in this industry were hit the hardest and the Ivory Coast lost about $1billion.
Following this crisis, the government of Ivory Coast has been working with the African Development bank to “rehabilitate the industry with new programs and schemes to attract more young people into the industry.” (3) They are also focusing on creating more domestic chocolate processing factories to capitalize on their raw materials and capture more value from the production of cocoa.(3) However, this cocoa industry, like the agriculture industry in general, is still a risky business and can easily crumble down in times of floods, pest epidemics and other natural disasters. In this essay, I discuss the colonial origins that have shaped the current cocoa industry in the Ivory Coast, their influence on the ongoing conflicts over cocoa related resources, and finally the need for Ivory Coast to diversify their economy to avoid the brutal effects of trade imbalances that may arise and exacerbate the conflicts.
Colonial roots of cocoa production in West Africa.
The colonial rule in most African countries not only shaped the economic evolution of many African states but also the political and the social. In order to understand this, it is important to understand the framework of institutions and how colonial rule helped shape the subsequent nature and shape that African institutions took in the postcolonial era. In their paper on institutions, “Understanding Institutions”, Acemoglu and Robinson argue that institutions- in other words how society is organized and functions- affect the economic performance of a country and account for the varying success in the performance of African countries post-colonialism. They find a strong correlation between extractive institutions and poor economic performance over a certain period of time. While there are some endogenous weaknesses in this analysis, it provides us the framework we need to understand the colonial effects of French rule in the Ivory Coast and how the cocoa industry became a battleground for elite ethnic groups.(4)
For the Ivory Coast, French colonial rule influenced how labor and land policies evolved over time- through both what it did and what it did not do. Firstly, because the country was sparsely populated, European settlers maintained strict laws on labor distribution through a quota system that prohibited African farmers from hiring labor until white farmers had their adequate supply of labor.(5) After the second world war, labor became increasingly scarce and many local farmers rallied against forced labor laws which led to “the cocoa boom of the 1950’s.”(5) However, this also meant that demand for land increased dramatically as both locals and migrants scrambled to take part in the booming industry of cocoa production. Secondly, the colonial legacy of taking land without formal political and legal processes has fueled the culture of entitlement for most ethnic groups. In her paper on, “Neocolonialism or Balanced Partnership? Reframing Agricultural Relation Between the EU and Africa”, Ioana Lungu discusses the influence of colonial history in perpetuating the culture of land grabbing within a modern context. She argues that “land grabbing can be understood as a crisis of neoliberalism intersecting with neoliberal development narratives…” (6)
To reframe this within the Ivorian context, by claiming land without any institutional accountability, colonists set a foundation for future conflicts over land redistribution. As Dwayne Woods, an associate professor of political science, notes “generous concessions of land from forest reserves were authorised”. (5) To summarize, while the French had a legal framework for the distribution of labor from which Ivorians could build their own, there was none for land. A clear example of poor institutions is the absence of solid property rights that leave the elite in charge of redistribution. Thus, setting in motion the trend that would ultimately lead to extreme violence between tribes when these resources were no longer enough.The increasing costs of forest rent have become a major factor in the ethnic conflicts that are tearing apart the once socially and politically state of Ivory Coast. Forest rent is defined as the difference between “the cost of producing a kilogram of coca after clearing forest land and the cost of producing a kilogram of cocoa upon replanting.”(5)
This increase is as a result of multiple factors including the rise of land and labor costs over time as demand for arable land became higher. This also stems from the increasing marginal costs associated with re-planting cacao trees which was not there at the pioneer front- “sporadic development of unexploited tropical forest lands to plant cocoa trees”.(5) These marginal costs result from the increasing need for fertilizers, labor and better seeds to maintain the same level of production once the soil starts losing its original richness. With all these moving pieces, farmers become anxious to acquire more tropical forestland and the “cost of reclaiming land with violence is less than trying to mobilise the increased labour and capital costs to maintain the forest rent.” (5) However, one can argue that this aggressive demand for land is tied to the narrow economic base that the Ivory Coast, like many other African countries, inherited from their colonial histories. These populations have limited options for economic activities and continue to fight each other over the “most profitable” economic activity available to them- cocoa production.
Economic development through Trade
This is going to become an even bigger problem as environmental groups push for less deforestation- that happens when farmers clear the forest in order to plant cocoa trees(7)- and land share becomes smaller for the demands rising population. Pests and diseases, old age cocoa farms and lack of soil nutrients have also contributed to the continuous decline of productivity and farms might not be able to meet the global demand for cocoa.(8) This would have larger implications if major buyers had to shift to other countries to acquire their supply demands. Yet, cocoa production still remains a major contributor to economic growth and urbanization in Ivory Coast. The question thus arises on whether Ivory Coast should invest in diversifying its economy away from the cocoa industry or if it should focus on creating interventions that increase productivity in the cocoa sector. There are various implications of either choice. As the lead producer of cocoa in the world, the Ivory Coast has gain tremendous economic profits from trading on the world market. These developments have gone beyond trading and had spillover effects in the rest of the economy resulting in urbanization and other economic development improvements.
According to researcher Remi Jedwab, in his paper on, “Why is African Urbanization Different? Evidence from Resource Exports in Ghana and Ivory Coast”, argues that cocoa booms have led to city booms and consequently economic growth. He disputes the idea that structural transformations such as the green economy and the industrial revolution that accounted for the development of cities through their effect on labor mobility in the West apply in the African context. He then proceeds to argue that, for countries like the Ivory Coast, urbanization trajectory has been closely interconnected with that of cocoa production.(7) He notes that cocoa production, like urban growth, started in the East of the country and moved towards the West, but cities in the East did not collapse as more cities were formed in the West. He found that about 80% urban growth in the Ivory Coast happened in areas suitable for cocoa production and traces the trajectory as it moved East to West. That being said, it is important to maintain that correlation is not necessary causation. This urbanization could be a result of infrastructural investment and labor migration to areas of cocoa production due to its central place in the general economy. If most jobs are generated within the Agriculture sector, and more precisely cocoa production, then more people will follow wherever the industry seems to be heading.
Yet, we have seen that Ivory Coast is moving towards industrialization. The government is investing increasing both yield per ha and factories that manufacture various cocoa products. This means capturing as much value from the supply chain as possible through creating a range of factories from grinding entities to chocolate-making companies.(9) It is working towards expanding the secondary market that processes products from cocoa to reduce tensions surrounding land acquisition. This is also an attempt to create a market for their surplus and address the issue of declining cocoa prices that has resulted from a supply surplus and “substantial reserve held by consuming countries”.(9) The latter is another consideration for the Ivory Coast when evaluating its position in the world market as a country with the highest comparative advantage in cocoa production. As noted by the OECD, in a report on cocoa production by the Ivory Coast, developed countries took advantage of falling prices to store reserves and thus changing the trading landscape. Ivory Coast, and other African producers of cocoa, remain price takers because of low investment in reserves and the lack of regulation policies that protect local farmers. The result of a limited market creates tensions in which the elites struggle to accumulate all profits from cocoa along ethnic and tribal lines. This leaves farmers insecure about the safety and sustainability of their businesses and in turn affects their production capacity as well as their livelihood.
So far, we have studied two difficult problems. On one hand, the comparative advantage that Ivory Coast has in cocoa production has not realized its full potential due to lack or limited complimentary infrastructure and policy framework to protect farmers and the economy in general. This lack of policy framework and infrastructure is a result of a combination of factors including the legacy of colonial institutions, poor leadership, and ethnic diversity along economic lines. On the other hand, we have seen an opportunity within this problem. The possibilities to diversify within the cocoa producing sectors by creating secondary markets through which the now majority youth working in the cocoa sector can transfer. I also discussed, briefly, the need for diversification to other sectors and other exports that do not rely on acquisition of big lands and that doesn’t require high labor demands. Alternatively, the Ivory Coast can consider investing in mechanized systems of cocoa production along with new education practices that allow the current labor surplus to transition in other sectors. Additionally, the new trade agreement among African countries to open borders- remove tariffs, allow labor mobility might help address this issue in the long run as more people have the choice of immigrating to other countries where they can contribute. That being said, this cannot solved without a political commitment by the government to address these challenges without partiality and with accountability.
1.Oecd.org. Retrieved 3 May 2019, from https://www.oecd.org/swac/publications/39596493.pdf
2. Adding value is way forward for cocoa producers – African Business Magazine. (2019). African Business Magazine. Retrieved 3 May 2019, from https://africanbusinessmagazine.com/sectors/agriculture/adding-value-is-way-forward-for-cocoa-producers/
3. Ghana and Cote d’Ivoire seek $1.2bn loan to revitalize cocoa industries. (2018). confectionerynews.com. Retrieved 3 May 2019, from https://www.confectionerynews.com/Article/2018/08/09/Ghana-and-Cote-d-Ivoire-seek-1.2bn-loan-to-revitalize-cocoa-industries
4.(2019). Economics.mit.edu. Retrieved 3 May 2019, from https://economics.mit.edu/files/1353
5. Woods, D. (2003, December 23). The tragedy of the cocoa pod: Rent-seeking, land and ethnic conflict in Ivory Coast | The Journal of Modern African Studies. Retrieved from https://www.cambridge.org/core/journals/journal-of-modern-african-studies/article/tragedy-of-the-cocoa-pod-rentseeking-land-and-ethnic-conflict-in-ivory-coast/0BC296AE5413C02D81255DF2FE1356A7
6. Lungu, & Ioana. (2017, December 01). Neocolonialism or Balanced Partnership? Reframing Agricultural Relations Between the EU and Africa. Retrieved from https://mpra.ub.uni-muenchen.de/83112/
7.(PDF) Why Is African Urbanization Different? Evidence from … (n.d.). Retrieved from https://www.researchgate.net/publication/267386204_Why_Is_African_Urbanization_Different_Evidence_from_Resource_Exports_in_Ghana_and_Ivory_Coast