COCOBOD – Page 2 – Michael Niemann

Over the past week, several sources reported that the Ghanian Cocoa Board (COCOBOD) released a second round of bonuses to cocoa farmers. According to the Joy Online, a total of GHÂ¢16,035,161.35 (about $16.45 million) will be released to the Licensed Buying Companies for distribution to individual farmers. The amount translates to about GHÂ¢1.71 ($1,75) per bag of cocoa. That does not seem much but for a country with an per capita income of $2,700 and many cocoa farmers making less than that, $1.75 per bag bonus makes a difference.

It is not clear, though, if that bonus is simply the high world market prices trickling down to the farmers. Much of the cocoa has already been sold in forward contracts and the current spot market prices apply to only a fraction of the cocoa sold. An more likely explanation is the election campaign going on in Ghana at the moment. The current president, John Kufuor, and the New Patriotic Party (NPP) came to power in 2004 and their term is up this December.

Continue reading “Bonuses for Cocoa Farmers in Ghana”

Cocoa from Latin America is making a comeback, at least according to a report in Confectionary News. It is often forgotten that Latin American cocoa dominated the world market until the early years of the twentieth century. After the Spanish colonizers brought cocoa to Spain and from there is quickly spread to the rest of Europe. But once industrialization made the production of chocolate bars possible and affordable, demand for cocoa expanded to levels that Latin American was not able to supply.

The spread of cocoa production followed a pattern first discussed by Francois Ruf, a French agronomist, who hypothesized that cocoa production depends on access to virgin forest land. He coined the phrase “forest rent” to explain that a new cocoa grove on new forest land is initially extremely productive and produces very high yields. As the trees near their life expectancy or are attacked by disease or pests, the yields decline, sometimes precipitously. Replanting in an existing cocoa grove never yields as good a return as planting in new forest lands. So productivity depends on capitalizing on the “forest rent” derived from previously untouched forests.Â Increase demand, therefore, over time leads to an expansion of cocoa production to areas that support the tree. As long as there was enough forest land available, there was no problem, but eventually, that expansion came to an end. The move to Africa in the mid 1800s is in part explained by the need for more forest land. Continue reading “A Cocoa Comeback in Latin America”