Lateral Cocoa Trade

Liberia and Côte d'Ivoire in West Africa

Liberia and Côte d'Ivoire in West Africa

Here’s a bit of trade news that usually falls by the way side. After opening the border between Liberia and the Côte d’Ivoire, cocoa farmers in Liberia have discovered that they can get more money selling their crop to Ivorian dealers. The difference is significant–$2.50/kilo instead of $1.00/kilo in their home country.

Since such trade is not illegal, farmers transport increasing amounts of beans across various border points. The new trade marks the converging of two developments. Liberia is eager to increase trade with its neighbors and the rebels who control the northern Côte d’Ivoire opened the borders as part of the agreement that will (finally) bring nationwide elections to this divided country.

The dramatic price differential seems to be another result of market liberalization, albeit on that was brought about by the brutal civil war that ravaged Liberia for much of the 1990s. Michael Wilcox, working for the Sustainable Tree Crops Program, has documented the Liberian “market inefficiencies,” i.e., lack of information which allows traders to squeeze individual farmers for every penny. I guess the exports to the Côte d’Ivoire show what happens when farmers have more options. Of course, that does not address the global pricing structure, but that’s another post.

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