Several news sources reported the opening of a new cocoa processing plant in Tema, Ghana. The Cargill plant will process about 65,000 tons of cocoa beans annually to produce chocolate liquor, cocoa powder and cocoa butter.
Ghana’s president Kufuor presided over the inauguration giving an indication of the significance the plant holds in the eyes of Ghanaian authorities. At the moment, Ghana processes 298,000 tons (about 40 percent of its cocoa bean production) domestically and exports the processed materials. The new plant will increase that amount substantially.
Capturing more of the value-added of the raw materials they produce and export has been the goal of developing countries ever since obtaining independence. Achieving that goal has been more difficult. Some raw materials do not lend themselves to further processing , others require a level of investment not available to many developing countries. Beyond the technical difficulties, there are, of course, also the entrenched practices and power relations along the commodity chains. Let’s look at the cocoa chain.
The traditional means of shipping cocoa beans is the 62.6 kilo bag. That’s how beans in Africa and many other parts of the world have been shipped forever. The bag is perfect for farmers, just the right size to be filled and transported. The bag is perfect for quality control–a simple probe can extract beans from the center to test for residual moisture and fermentation levels.
When I visited the cocoa warehouses in Brooklyn, I saw thousands of bags stacked high to the ceiling. But I learned from the managers that more and more chocolate makers prefer their cocoa to be delivered in bulk–containers or 2,000 lb sling bags. So cocoa has to be repacked to suit those manufacturing needs. There is also the question of transport cost. R. Dand, author of very interesting book The International Cocoa Trade, estimates that the transport cost of bulk cocoa in special double-hulled ships amounts to less than 35 percent of the transport cost of bagged cocoa.
More importantly, many of the global cocoa distributors (Cargill, A.D.M., E.D.F Mann) operate their own processing facilities and increasingly deliver chocolate liquor (cracked, winnowed and roasted cocoa beans that have been ground into a thick liquid) and cocoa butter in liquid form to chocolate makers. This chocolate version of “just in time” delivery has led to a different manufacturing structuring of the manufacturing process. Many chocolate makers no longer have roasting and grinding facilities.
Chocolate liquor and cocoa butter produced in Ghana, for example, cannot be delivered in liquid form and manufacturers therefore have to maintain melting facilities to handle this form of input. But for Cargill and others, the incentive to create processing facilities in producer countries is, of course, the lower labor and construction cost. It seems that their powerful position in the middle of the chain has convinced manufacturers to consider this option. At least that’s what the increasing level of processing in producer countries leads me to believe.