I’ve written earlier about a new cocoa processing plant being opened in Ghana. Processing refers to roasting, winnowing, cracking and grinding the cocoa beans. It also can include pressing the cocoa to extract cocoa butter and produce cocoa powder.
To the left is a breakdown of the top ten cocoa processing countries for the last cocoa year. Despite the preponderance of industrial countries at the top, there is a solid presence of cocoa producers among the top ten countries.
There is some debate as to the total economic benefits of such processing plants, particularly when they are owned by transnational corporations like Cargill or ADM. So let’s start with the upsides:
At a minimum, there is the influx of capital necessary to build the plant. This comes either from the transnational or from an international financing entity or from the producer country’s government; most often, it’s a mixture of these sources.
Then there is the wages paid to local workers, both those who help construct the plant and then those who are employed at the plant and any taxes paid by the plant operator.
There is also the increased price that cocoa butter and chocolate liquor fetch on the world market. Here’s an example of these differentials:
The spot market price for Ghana cocoa on 11 December 2008 was $2,913/ton. The spot market price for cocoa butter on the same day was $6,704/ton and for Ecuadorian chocolate liquor $4,184/ton. Those are significant mark-ups which help the country’s balance of trade.
The downsides depend on the ownership structure. If the plant is 100% owned by a transnational corporation, profits and amortization of the plant can flow out of the country through repatriation. These financial flows offset whatever balance of trade benefits accrue to the country in the long term. The only benefit remaining are local wages and taxes to the extent that these have to be paid.
If the ownership structure is weighted towards local ownership, either public or private, then benefits accruing to local interests increase. As with all development projects, a careful cost benefit analysis is required to assess the full impact.