Cocoa Exports of Cameroon Structure and Mechanism

Theoretical Economics Letters, 2018, 8, 3223-3251
http://www.scirp.org/journal/tel
ISSN Online: 2162-2086
ISSN Print: 2162-2078
Cocoa Exports of Cameroon: Structure and

Mechanism of Operation
Ze Engamba Herve, Guiyu Zhao
College of Economics and Management, Jilin Agricultural University, Changchun, China
How to cite this paper: Herve, Z.E. and Abstract

Zhao, G.Y. (2018) Cocoa Exports of Ca-
meroon: Structure and Mechanism of Op- The aim of this paper is to study the cocoa market in Cameroon over the pe-
eration. Theoretical Economics Letters, 8,
riod 2000 to 2016. The study consisted in presenting in a general way the or-
3223-3251.
https://doi.org/10.4236/tel.2018.814200 ganization, structure and operating mechanisms of the Cameroon cocoa
market, particularly the value chains from family farmers to final consumers
Received: September 12, 2018 through exports; it also allowed us to highlight some issues and prospects for
Accepted: October 27, 2018
Published: October 30, 2018
reviving the cocoa sector in Cameroon. It shows that Cameroon, like most
cocoa-producing countries, also faces many difficulties not only externally,
Copyright © 2018 by authors and but also because of the international environment (the volatility of the prices
Scientific Research Publishing Inc.
of export products), internally through implemented policy measures, their
This work is licensed under the Creative
Commons Attribution International consistency and phasing, as well as their deadlines. Starting from the liberali-
License (CC BY 4.0). zation of the sector in the early 1990s to the devaluation of the CFA franc in
http://creativecommons.org/licenses/by/4.0/ January 1994, a relative stagnation of the country’s agricultural performance
Open Access
has been noted so far. The problem is therefore not only institutional and
structural but also cyclical. With regard to domestic marketing, the govern-
ment’s option of a return to stabilization will reaffirm the place and the role
of the State in the management of the sector. As far as external marketing is
concerned, to remedy this, the government option consists of setting up a
state-controlled advanced sale system through the centralization of sales and
the monitoring of their quantitative execution. However, for a development
of Cameroon’s artisanal, semi-industrial and industrial cocoa processing in-
dustry, we need strong support and protection of the local industry in order
to attract foreign investors and encourage local initiatives, with accompany-
ing measures that make cocoa processing more profitable in Cameroon as in
other producing countries.
Keywords
Exports, International Market, Cocoa, Cameroon
DOI: 10.4236/tel.2018.814200 Oct. 30, 2018 3223 Theoretical Economics Letters

Z. E. Herve, G. Zhao
1. Introduction
Starting from the premise that generalized free trade can only enhance growth
and participate in poverty reduction, part of the economic literature on interna-
tional trade advocates liberalizing all trade. One of the limitations of this litera-
ture lies in the priority it places on competition between developing and indu-
strialized economies, often focusing on the problem of distortions of competi-
tion caused by agricultural policies. In fact, developing countries are not exposed
solely to competition from the North, especially in commodity markets such as
coffee and cocoa. The growth of South to South trade masks a recomposition of
the commercial performances of each of these economies. The comparative ad-
vantages acquired in the past and which had crystallized for a time the market
shares held by the southern countries which produced raw materials, are waver-
ing under the weight of new competitors. The structure of the world supply of
coffee and cocoa is a good illustration of this change (Anna L and Thierry P,
2008) [1].
Often considered as inseparable (Cocoa and Coffee), cultivated in the same
zones (tropical zone in general), cocoa is mainly traded on the commodity ex-
changes of London and New York. Subject to rumors or anticipations of stock
outs, poor harvest, weather or political events, the market is very volatile and
speculative; price changes can be very important. However, prices have tended
to decline since the early 1980s under the double effect of excess supply and
large stocks held by consuming countries. In the 1980s, these countries took ad-
vantage of falling prices to build considerable reserves used to regulate the mar-
ket in their favor. Producer countries are not able to build stocks for their bene-
fit; they remain subject to the global market (Atlas et al., 2007) [2].
A panoramic view of supply and demand shows that the global cocoa supply
is highly dependent on African, South American and now Asian countries. The
supply is abundant, often leading to a supply-demand imbalance (confers a law
of supply and demand of J.B. Say), causing a structural weakening of prices pre-
judicial to most producers. Indeed, world cocoa production since the 20th cen-
tury has been growing at a rate of around 2% to 2.5% and reached 1.5 million
tonnes in 1964. Today, it exceeds 2 million tonnes, of which Africa alone ac-
counts for nearly 66% (Mossu, 1990). The major producing countries are: Côte
d’Ivoire, Ghana, Indonesia, Cameroon and Nigeria (FAO et al., 2007).
Total world production comes from three production basins: The Gulf of
Guinea (Cote d’Ivoire, Ghana, Nigeria, Cameroon, etc.), with total production
hovering around 70%; South America, Central America and the Caribbean (Bra-
zil, Ecuador, Peru, etc.), with total output hovering around 16%; South Asia and
Oceania (Indonesia, Malaysia, Papua New Guinea, etc.) with total production
around 18% (FAO, 2017) [3].
As for the country importing cocoa beans, the main actors are: The United
States, the EU, the United Kingdom, the Russian Federation (ICCO et al., 2007)
and China, which is recently positioning itself more and more like a future El-
DOI: 10.4236/tel.2018.814200 3224 Theoretical Economics Letters

dorado of this market by 2050. These countries import about 3 million tons of
cocoa each year (Wikipedia, 2009) [4].
From the historical point of view, the Cameroonian cocoa market has under-
gone several changes, starting after Independence of the country (1960).
Indeed, from 1980 to 2000, cocoa and coffee exports accounted for nearly 28%
of the GDP of non-oil products and 40% of primary sector exports generated
around 110 billion CFA francs/year, distributed to producers (INS COMEX,
2005) [5].
From 2005 to 2010, these exports increased from 180,000 to 227,000 tonnes,
an increase of 47,000 tonnes in absolute value and 20.6% in relative value. In ad-
dition to this growth is the good behavior of international market prices, which
can explain the significant change in their FOB (Free On Board) value, which
rose from 116.5 billion FCFA in 2005 to 312.3 billion FCFA in 2010, an increase
of 195.8 billion CFA francs in absolute value and 168% in relative value (INS,
2009). Despite the uncertainties and risks faced by producers facing this highly
volatile market, the forecasts of international organizations, with regard to price
developments on the international markets for cocoa and coffee, are encourag-
ing over the next few years. In view of the average growth rate of 3% in tradi-
tional markets and optimistic forecasts for growth in consumption in the
emerging markets of the Middle East, Asia and the non-traditional markets that
are the producing countries (ONCC, 2011) [6].
The economic crisis of the 1980s, which resulted, among other things, in the
drastic drop in prices of agricultural raw materials since 1986 and in the State’s
incapacity, through the National Office for the Marketing of Commodities
(ONCPB), to further support the prices to the planters, led to a reform of the
sectors under the guidance of the donors. Indeed, the Cameroonian economy
was an administered economy, largely marked by the presence of the state as the
main actor, provider of wealth and jobs (increased interventionism of the state
in economic activity). The crisis of the middle 1980s led to the implementation
of the Structural Adjustment Policies (SAPs) instituted and imposed by the
Bretton Wood institutions in developing countries, largely resulting in a strong
liberalization of the Cameroonian economy. The cocoa and coffee sectors also
suffered from these liberal reforms. One of the consequences of these reforms
was the commitment of the State as a major economic actor. Indeed, the dissolu-
tion of the ONCPB in 1991 by the creation of the ONCC or National Office of
Cocoa and Coffee (secular branch of the State) and the CICC or Interprofession-
al Council of Coffee and Cocoa (consultation structure of private operators), the
liberalization and deregulation of marketing with the consequent elimination of
stabilization and the easing of conditions for access to the export profession the
privatization of export quality control and devaluation of the FCFA in January
1994 are perfect illustrations of the restructuring of these sectors [7].
Despite the expected effects of these measures (liberalization) and the devalu-
ation of the CFA franc in 1994, it is clear that the objectives have not been
achieved in particular: the local processing of cocoa (through industrialization);

optimizing the competitiveness of products; the qualitative and quantitative im-

provement of production; transparency in commercial transactions, improve-
ment of the Cameroon label in the world cocoa supply market (PRDFCC, 2014).
Hence, the interest and the socio-economic stake in the cocoa sector. The pur-
pose of this paper is to present in a general way the structure and operating me-
chanisms of cocoa exports in Cameroon from family farmers to consumers; It
also provides an answer on the perception of Cameroonian cocoa in the interna-
tional market and its impact (perception) on cocoa export earnings in the
economy [8].
The rest of the paper is organized as follows: Section 2 presents the adopted
methodology; Section 3 presents the organization, structure and operating me-
chanisms of the sector; Section 4 highlights the prospects of reviving the sector
in Cameroon; finally, Section 5 will allow us to conclude and propose some solu-
tions for economic policy.
2. Methodology
The study focuses on the cocoa market in Cameroon over the period 2000 to
2016. Its objective is to present in a general way, the organization, the structure
and the mechanisms of the functioning of the Cameroonian cocoa market, nota-
bly the starting value chain from family farmers to consumers to exports; finally,
it will allow us to highlight some prospects for reviving the cocoa sector in Ca-
meroon. The approach is simply to take stock of the current situation of the co-
coa market in Cameroon, notably on the issues related to cocoa exports of Ca-
meroon origin and to provide some solutions to the many difficulties faced by
Cameroon. For this purpose, a thorough literature search on the subject was
done both theoretically and for data collection to strengthen our analysis. How-
ever, in this study we did not carry out a field survey near the producers and
professionals of the sector to better understand its operationalization. On the
other hand, it may be completed in the future by other much more in-depth
work. The collection of information is divided into two parts: Statistical data:
diagrams 2 and 3 are from UNCTAD in 2008; Chart 1 on the evolution of aver-
age prices to farmers comes from data collected at faostat and oncc of Came-
roon. The literature presented here is the result of extensive documentation of
the various reports of the ICCO, the World Bank and the Cameroonian NSI
since the early 2000s.
3. Organization and Stakeholders in the Sector

With regard to the organization and the actors of the sector, the production is
made by small farmers and more or less structured organizations like coopera-
tives or large groups (large plantations). Indeed, the commercial cocoa resulting
from the work of local producers or craftsmen is introduced into marketing
channels whose number of actors has greatly increased since the liberalization of
the sectors. The most numerous license holders, accredited by local control bo-

dies, act as intermediaries to supply exporters. Today, major exporters are in-
vesting in purchasing systems closer to producers at the expense of smaller play-
ers. This system also affects patented local exporters who are very numerous at
first sight see for the most fragile their market shares shrink and disappear.
These major exporters are also playing an increasing role in the transformation
of market cocoa into manufactured products in the producing countries. They
provide raw material, liqueur, butter, powder, the industry of the consuming
countries or put on the local or regional markets of the chocolate products.
Three major multinational groups dominate this market: ADM Cocoa, Cargill
and Barry Callebaut. They are present in West African producing countries
alongside other actors whose importance varies from country to country. The
bulk of cocoa goes, in the form of market cocoa or semi-finished products, to the
major consuming countries. After landing in the ports, the cocoa, which can re-
main stored in the form of beans about 3 years or more, is redirected towards
the industrialists and manufacturers who directly manufacture finished products
or products (cover) intended for the industries and craftsmen of the chocolate
factory and biscuits that have not invested in the direct treatment of cocoa
beans.
With respect to local stakeholders in the industry, historical developments in-
dicate that several changes have been made over time. These can be subdivided
into two main periods. That of the pre-crisis period in the mid-1980s and the
post-1990 period. Indeed, the Cameroonian economy was an administered
economy, largely marked by the presence of the state as the main actor, provider
of wealth and wealth jobs (increased state interventionism in economic activity).
The cocoa and coffee sectors are under the supervision of the ONCPB (National
Office for the Marketing of Commodities), the regulatory body for these sectors.
However, the crisis of the mid-1980s led to the implementation of structural ad-
justment policies instituted and imposed by the Bretton Wood institutions in
developing countries. This largely translated into the concept of a market
economy theorized by classical and neoclassical economists. This has mainly re-
sulted in a strong liberalization of the cocoa and coffee sector in Cameroon since
1991. To this end, the State has been replaced by two structures namely: the
ONCC or National Office of Cocoa and Coffee (secular arm of the State) and the
CICC or Interprofessional Council of Coffee and Cocoa (structure of concerta-
tion of the private operators). However, various other local structures and inter-
national organizations are actively involved in the deployment of the Cocoa and
Coffee sectors [9].
 FODECC—Cocoa and Coffee Sector Development Fund
To increase the efficiency of the cocoa and coffee sectors, the Fund for Devel-
opment of the Cocoa and Coffee Value Chain (FODECC) was created in March
2006 by Presidential Decree No. 2006/085 of 9 March 2006 on the organization
and operation of the Development Fund. Its main mission is to support this sec-
tor through the financing of projects aimed at securing, increasing and guarantee-
ing the good quality of cocoa and coffee production.

 Companies under the supervision of the Ministry of Agriculture

In fact, the State is carrying out a series of actions in these main production
areas with the aim of: improving the economic and social well-being of small
producers and contributing to the sustainable management of basin ecosystems
of production.
 Technical unit for monitoring and coordinating the cocoa and coffee sectors
At the level of the Prime Minister’s Services, a technical unit for monitoring
and coordinating the cocoa and coffee sectors has been created to ensure the
coordination and transparency of the various operations in these sectors.
 Other local stakeholders
Approved buyers
Producer associations
Association of Cocoa and Coffee Exporters (AECC)
Trade Union of Manufacturers and Buyers of Cocoa and Coffee of Cameroon
(SUACC) [10].
3.1. Structure and Mechanism of Operation

The removal of government support measures has led to the disorganization of the
sector and in particular the increase in the number of private actors throughout
the chain, causing a decline in quality and production volumes (Graph 1).
 Regulatory bodies
These bodies have, statutorily, the responsibility for a part of the regulation of
cocoa farming.
1) The regulation of production: The Ministry of Agriculture and Rural De-
velopment (MIDADER).
It is in charge of the cocoa production component. This organ is involved in
the control of cocoa production from seed to fermentation. To this end,
MINADER carries out extension activities and agricultural advice. MINADER
deploys extension managers in the production areas who are in charge of raising
producers’ awareness of good agricultural practices.
2) Regulation of marketing: The National Office of Coffee and Cocoa (ONCC).
This body is in charge of the export quality control component of Cameroon.
As such, its agents make technical visits to the facilities of approved quality con-
trol agencies, factories and storage facilities for approval. The ONCC also has a
role of promoting the brand image of origin Cameroon on cocoa.
The ONCC also provides the link with the various stakeholders in the sectors
(exporters, manufacturers, forwarding agents, quality control companies) in-
cluding the Inter professional sector and collects information on many aspects
(purchase prices, planters, market calendars. Names of active exporters in the
field, denunciation of bad practices of certain exporters).
 The Inter professional council of coffee and cocoa (CICC)
The purpose of this body is to provide all the professional bodies constituting
the various colleges represented at its general assembly with any assistance

Graph 1. Cocoa sector in Cameroon.
and/or services to increase the efficiency of the entire sector. The CICC has
within it: a college of producers-national association of coffee and cocoa pro-
ducers (GIC, UGIC, federation, confederation); the college of machineries; the
college of exporters; the college of transformers.
Regarding the processing of cocoa, part of Cameroon’s cocoa is processed lo-
cally, but about 90% of the cocoa is exported to Europe, particularly to the
Netherlands, as a raw material for chocolate makers and the chocolate industry.
confectionery. The three biggest buyers of Cameroonian cocoa are: ADM (Ar-
cher Daniels Midland), Cargill and Barry Callebaut. Today, a majority of local
processing companies are subsidiaries of large multinationals in the global cocoa
trade.
 Agricultural professional organizations (OPA)
For two decades, sub-Saharan African states have disengaged themselves by
unilaterally transferring responsibilities to professional agricultural organizations
(OPA), also known as OP.
The coxeurs are illegal buyers and help to disrupt the marketing of cocoa in
Cameroon. The coxeurs are collectors and touts operating directly from the
producers in the bush. They buy the cocoa and coffee in the villages face to face
with the farmers, edge field, often deceiving them (on the quantity and the qual-
ity) but paying them immediately.
3.2. Vertical Integration and Horizontal Concentration

Graph 2 representing the cocoa supply chain above shows that there have been
important changes in the chain structure, both in the cocoa producing countries

Graph 2. Cocoa supply chain. Source: UNCTAD Secretariat, 2008.
and in the consuming countries (cocoa importers). In this sub-section, we will

first examine the structural changes originally made, referring specifically to the
case of Cameroon, and then the restructuring processes outside the producing
countries. The structural configuration of the chain largely determines the bar-
gaining power of the various actors in the supply chain, and therefore deserves a
detailed examination.
The relationship between concentration, competition and efficiency is com-
plex, in the cocoa and chocolate sector as elsewhere. The phenomenon of con-
centration is assessed here by reference to aggregated industry classifications and
market shares.
As for the other cocoa producing countries, a distinction must be made be-
tween production and marketing. Production is centered around farmers. At the
end of the 1990s, almost 90% of world cocoa production came from small farms
with less than five hectares. The number of cocoa farmers in the world was esti-
mated at about 14 million, three quarters (75%) in Africa. In Cameroon, it is es-
timated that 400,000 hectares of land are dedicated to cocoa cultivation, with a
production structure characterized by the predominance of small producers (at
the end of the 1990s, there were over 1.6 million small cocoa farmers); between
2000 and 2005, the yield per hectare averaged 370 kilograms per hectare. It is es-
timated that in 2002, only 10% of cocoa (and coffee) growers were organized in-
to producer associations, mainly through Joint Initiative Groups (JICs), which is
also their share of trade cocoa. These growers are mainly engaged in harvesting,
fermenting, drying, bagging and sometimes transporting cocoa beans to delivery
points in the interior of the country. At these stages of production, the cost of
labor (often family) and material inputs (fertilizers, insecticides and fungicides)
are by far the main cost components. With regard to the marketing of cocoa, the

local marketing chain (until the boarding of cocoa aboard the ship) goes from
farmers to international buyers, with two intermediate stages. The first step in-
volves collecting at the local level—at or near the farm—and delivery to the ex-
port port (domestic marketing). The second stage is export shipping (external
marketing). A simplified version of the marketing chain is illustrated below, in
the specific case of Cameroon [11] (Graph 3).
Domestic marketing is carried out by producer organizations, local traders
operating on their own behalf or agents of the exporters or the local processor.
Exporters, independent buyers and their agents must have signed a declaration
of commercial activity and hold a professional card issued by the Inter profes-
sional Council for Cocoa and Coffee (CICC). The main activities include the
collection and processing of cocoa beans on the spot and their transportation to
the port.
The domestic marketing chain is often characterized, as indicated below, by
some fragmentation, depending on the marketing channels prevailing in a given
region:
Farmers bring their produce to the warehouse of the producer organization to
which they belong so that it can be transported to the exporters’ warehouses.
An exporter is a local purchasing organization (with its own employees) and
buys directly from producers, from the farm itself or close to it (purchase origi-
nally). There is also direct trading when large exporters and processors use
agents to buy cocoa directly from producers or from village markets for delivery
to buyers’ warehouses.
Self-employed people—usually traders who often have other activities—procure
small amounts of cocoa from several subsidiary collectors (or “local collectors”,
who are often themselves cocoa farmers), or directly from producers, in order to
make a larger batch for the exporter.
At the regulatory level, initial purchases must be made in the context of orga-
nized markets, at the initiative of the producers and their groupings and in liai-
son with the buyers and the competent administrative authorities. Door-to-door
or overnight cocoa purchases are prohibited. The purpose of all these require-
ments was to strengthen the relative bargaining power of producers near buyers
[12].
In practice, farmers, including individual producers, often sell directly to local
traders or agents of the exporter. These traders buy directly from or near the
farm and transport the product to the exporter’s purchase points (on-site ware-
houses) in the cocoa production areas. From there, the cocoa is transferred to
the exporter’s warehouses at the point of export (the port of Douala).Low quality
(residual) beans unfit for export are sold at reduced prices to the agents of the
local processing company.
External marketing is provided by exporters, or freight forwarders. The export
of cocoa beans is reserved for operators who have signed a declaration of com-
mercial activity and who hold a business card issued by the CICC. Exporters buy
from cooperatives, other middlemen and even producers and sell to international

Graph 3. Internal marketing structures—Cameroon.
buyers (often affiliates). They are responsible for all operations specific to export
transactions (physical handling at the port, customs clearance, export packaging,
phytosanitary treatment, and other obligations imposed by the exporting coun-
try and the importing country or negotiated under the contract export sales). In
most cases, these functions are provided through a network of service providers.
Cocoa transport and related formalities are handled by a “freight forwarder”
acting on behalf of an exporter who handles all shipping and insurance formali-
ties and documents for the goods. An “aconite” takes care of loading the cargo
on the ship. Quality control is provided by approved companies. The exporter
plays a central role in this whole network of services.
Traditionally, the first clients for cocoa in the export markets were importers
who bought the cocoa for their own account, then sold it to manufacturers (co-
coa processors and chocolate manufacturers). Gradually, the boundaries be-
tween traders and industrial users in this sector have faded. Large processors and
manufacturers are now also the main international buyers of cocoa in export
markets. In addition, as we will see below, these buyers have integrated vertically
upstream, by taking up some extent the export activities in the countries of ori-
gin.
In the case of cocoa, financial flows and physical flows operate in the opposite
direction: exporters generally provide credit to intermediaries, who use the
funds to pay collectors and growers.
1) Arrêté no 00026/MINCOMMERCE du 12 août 2005, art. 6.
2) Ibid.
Liberalization of the cocoa sector in West and Central Africa has led to further
concentration in the export sector, with a tendency for traders and foreign man-
ufacturers to operate, either directly or through proxies.
During the first years of liberalization, a large number of extremely frag-
mented local traders (local buyers and exporters) were involved, sometimes
leading to a temporary increase in producer prices. However, the sector has been

rapidly consolidating as many of these traders have been squeezed out by fierce
competition. With respect to external marketing, a small number of large private
exporters have gradually dominated export markets. In Cameroon, more than
60% of exports reported between August 2006 and July 2007 had been made by
the four largest exporters (in terms of tonnage shipped). The largest exporter
alone accounted for about 29% of shipments during this period. As far as cocoa
supply is concerned, exporters are involved in the entire chain from production
to export. In countries of origin, producers have little bargaining power over
these large traders who, directly or through contracts with agents, buy as close as
possible to the source of production [13].
This process of horizontal concentration has been accompanied by a tendency
for traders and foreign manufacturers to move vertically upstream to the point
of origin. As in other cocoa producing countries, in Cameroon the main local
processing and export companies are now subsidiaries, or close partners, of mul-
tinationals active in the cocoa sector worldwide. For example, the Cameroonian
cocoa processing company SA, known as SIC cocoa, was owned (99.95% at 31
August 2006) by Barry Callebaut, a leading Swiss cocoa processing and chocolate
manufacturing company. The American company Archer Daniels Midland
(ADM) has acquired—with the company Olam registered in Singa-
pore—Usicam, one of the largest facilities for drying, cleaning and storage of
cocoa and other related activities in Cameroon. ADM is, together with the com-
pany Cargill (also present in Cameroon for the supply of cocoa and the corres-
ponding logistics), a major trader and processor of cocoa in the international
market. The country of destination of more than 77% of the consignments de-
clared for export between August 2006 and July 2007 was the Netherlands,
which is also explained by the presence on the spot, in Cameroon, of multina-
tional companies (Cargill and ADM in particular) which have their main
processing facilities in the Netherlands. Other multinational trading compa-
nies—including Olam and ED & Man—have also established a local presence in
Cameroon. And factual relationships of dependence and control are added to
these formal links between companies. In particular, a number of local exporters
that are not united by formal relationships with foreign firms are nevertheless
dependent on them as sources of financing. In practical terms, these exporters
act as freight forwarders by selling their FOB products to international buyers
for whom they receive financing. The internalization of activities in the various
segments of the cocoa value chain under the auspices of multinational compa-
nies makes a priori possible tacit or formal collusive behavior [14].
This movement of concentration and integration of firms in the cocoa export
sector in Africa is apparently driven by two factors. The first was access to
finance, which put local exporters at a competitive disadvantage vis-à-vis foreign
companies. With the liberalization of the sector, private commercial banks in
producing countries have become reluctant to finance local operators in the co-
coa sector and have tightened credit conditions. According to the statistics of the
Professional Association of Banks and Financial Institutions of Côte d’Ivoire

(APBEF-CI), for example, the total amount of credits for the cocoa and coffee
season at the end of January 2000 (six months after liberalization of the cocoa
sector) was CFA 133 billion, or an average of 9.5% of total loans granted by
banks, well below the level of a few years earlier, which was close to 20%. Loans
from these commercial banks had very high interest rates of 18 to 25 percent a
year. Local exporters were therefore seeking to affiliate with foreign trading and
processing companies from which they could receive credit at much lower inter-
est rates (4% - 6% per annum). In fact, most multinational trading and
processing companies have a strong financial rating and get most of their finan-
cial resources from institutional investors. For them, the cost of capital is very
low (with an interest rate equal to the adjusted LIBOR rate plus a margin, de-
pending on the company’s rating), compared to that which local traders have to
pay [15].
The second factor was the obvious economies of scale in cocoa transport lo-
gistics. In the 90s, bulk transport of cocoa beans developed in international
trade. Cocoa beans are loaded into shipping containers (“containerized bulk”) or
directly into the ship’s hold (also called “mega-bulk” method). In the early
2000s, it was thus transported in bulk between 800,000 and 900,000 tonnes of
cocoa per year for Europe only. Bulk transport may be less expensive than con-
ventional jute sacks in a proportion of not less than one-third, but the quantities
involved require large cargoes, which is possible at the moment only for large
companies. This development has resulted in significant cost savings, but it has
also strengthened the competitive position of large multinationals. In addition to
these important structural consequences, it is not excluded that bulk transport
has had the unintended consequence of a decline in the quality of cocoa. In bulk
transport, cocoa beans are simply dumped in containers. This type of transport
involves storage in piles (rather than in bags) (i.e. beans are piled up on the
warehouse floor) and other logistical operations specific to bulk (as it is for ce-
reals, cocoa beans are unloaded from the ship’s hold and transported to the
warehouse by hopper or conveyor belt). With all this, there can be a mix of co-
coa of different origins and physical alterations. But attempts to revert to tradi-
tional jute bagging have met with strong opposition.
There has also been a strong concentration of structures for cocoa purchases
at the international level. ADM, Cargill and Barry Callebaut are the main inter-
national buyers of Cameroonian cocoa in export markets. In 2003, these three
companies would have bought 95% of Cameroon’s cocoa production. The
emergence of this oligopsonistic structure for cocoa purchases is similar to the
structural changes taking place at the international level [16].
3.3. International Organization and Structure of the Industry

In consumer countries, the chocolate manufacturing sector and the chocolate
consumption market have also undergone significant changes, which have im-
plications for the structure of the cocoa market as a whole.

The patterns of vertical integration and de-integration, horizontal concentra-

tion and globalization of operations have undergone important structural
changes at the international level in the following areas: International trade in
cocoa beans and cocoa; Cocoa processing (processing of cocoa beans into cocoa
mass/mass, cocoa butter and cocoa powder); Manufacture and marketing of
couverture, or chocolate for industrial use (the raw material of food chocolate
manufacturers); Manufacture and marketing of consumer chocolate; Retail sale
of chocolate in consumer countries.
1) CNUCED, TD/B/COM.1/EM.10/2, cf. supra, note 25, p. 11.
Thus, the cocoa-chocolate sector is highly concentrated at various stages. In
many (remote) areas, cocoa farmers face oligopsony or even monopsony situa-
tions. In consumer countries, concentration is becoming stronger in retail activi-
ties and as for markets for intermediate products (semi-finished products de-
rived from cocoa and cover), they are generally characterized by an interaction
between oligopsonistic and oligopolistic structures [17].
3.4. Concentration, Competition and Efficiency

The above analysis of market structures is supplemented with information on
price trends in the cocoa and chocolate industry. This section refers only to
changes in prices and cost structures that can at least partly be observed in con-
nection with the consolidation and restructuring of markets. But for lack of suf-
ficient information an exhaustive factual analysis of costs and margins through-
out the chain cannot be made. With regard to the purchase of cocoa, it has been
seen above that liberalization had resulted in increased concentration in the ex-
port sector, since foreign trading and processing companies tended to integrate
their upstream countries of origin. Oligopsonistic structures have emerged for
cocoa purchases, both locally and internationally. Are these consolidations and
restructuring schemes accompanied by significant price movements? The an-
swer seems to lie in an analysis of price trends since liberalization: The share of
producer prices, converted into dollars, relative to world prices; additional data
on marketing costs and taxes; other factual elements (Figure 1).
A number of observations can be drawn from the relative movements of pro-
ducer prices and world prices. Cocoa producers are most often victims of ex-
ogenous shocks due to the volatility of world prices. In fact, the cocoa market is
mainly characterized by a strong fluctuation of prices, which results in the spe-
culative behavior of the producers pushing them to adopt behaviors of diversifi-
cation of their production activities. The figure above illustrates this with a
downward trend of prices weakening the welfare of producers.
The figure above is a trend of the average FCFA price of cocoa near planters
in Cameroon. Indeed, this figure shows that prices have been very volatile since
the 2000s and continue to be so far because of the harmful effects of the liberali-
zation and devaluation of the CFA franc in the early 1990s, following the decline
of commodity prices in the mid-1980s. This is not encouraging for the

Figure 1. Evolution of average prices to cocoa farmer from 2000 to 2016 in Cameroon.
Sources: Author’s conception using research data with STATA 14.
producing countries, which are suffering from the sum of its shocks and are
seeing their profits fade. On the other hand, this figure also shows that a post-
eriori prices seem to go back which would be good news for the cocoa producers
even this one is only a logical continuation of a cycle which will have long im-
pacted negatively on the conditions of life of cocoa farmers. There is therefore
hope to hope in a horizon, certainly uncertain but more or less close to a relative
rise in prices.
Notes: In cocoa trading, futures contracts traded on the futures and financial
instruments market in London (LIFFE) and the New York Coffee, Sugar and
Cocoa Exchange (NYBOT) are used as benchmarks for world. In Cameroon,
export prices are correlated with LIFFE futures prices.
With regard to additional data on internal marketing costs and taxes, the
analysis of additional data and the literature on marketing costs and taxes is par-
ticularly enlightening. Indeed, the breakdown of expenditures in the cocoa sec-
tor in Cameroon focuses on taxes and other charges levied on cocoa shipments;
costs incurred at the plant and the port of export. “Export taxes and duties” in-
clude explicit export taxes (such as the export duty) on exports. “Other charges”
include various fees to certain organizations, fees for quality inspection, and
other administrative costs. These “Export taxes and duties” and “Other charges”
together constitute the share of public levies in the export value of cocoa. The
“Freight Forwarder” covers the general expenses and freight forwarder costs
(shipping formalities, insurance and documents for the export of cocoa, and or-
ganization of delivery to the port). “Port Services” essentially covers the costs of
quality inspection and Phytosanitary treatment, storage and port insurance,
lighterage costs and other logistical costs (recent container loading system) and
then other expenses (e.g. new packaging). “Initial processing and conditioning”
is essentially expenditure (drying, sorting, bagging, weighing, marking, storage,
etc.) at the plant level (packing plants, usually near the export port). “Other costs

and margins” includes other costs borne by the exporter and the estimated cost
of its profit margin [18].
In practice, two analyses can be made: First, there is a significant reduction in
taxes. A sharp decrease in the incidence of direct export taxes, partially offset by
the introduction of new indirect taxes. On the other hand, marketing costs do
not seem to have declined significantly. Since the share of producers in the ex-
port price is dependent on the marketing costs and taxes, the recent increase in
the share of producers in the export price was more likely to result from tax re-
ductions than cost savings from more efficient services; Second, the impact of
the “exporter share” increased over the period considered, but there was insuffi-
cient information to examine in detail whether this increase was due to cost in-
creases or increased profits. The “exporter share” here includes only certain
overhead costs borne by the exporter and his profit margin. It does not cover all
the functions to prepare the cocoa for shipping and load it on board the ship.
These functions are taken into account here in various other cost items that are
billed in practice to other parties (the freight forwarder for example) [19].
With respect to other factual elements, changes in prices, costs and margins
are at the heart of the competitive analysis. However, other factual elements of a
more qualitative nature reveal practices in producer countries that might fall
under the scope of competition law. In Cameroon, the National Cocoa and Cof-
fee Board carried out a review of quality control certifications and export sales
declarations which revealed certain shortcomings that could be due to ques-
tionable practices. In Cameroon, only grade I and grade II cocoa beans can be
exported (grade I is the highest grade). Pre-shipment samples of the cocoa beans
destined for export are collected to analyze and sort the beans to determine their
quality and to issue the appropriate certificate. Indeed, if Grade I (GI) cocoa was
exported as Grade II (GII) cocoa, this means that exporters in Cameroon have
made “devalued” export sales contracts with their buyers, perhaps because of the
unequal bargaining positions of the international buyer and the local exporter,
or even the existence of collusion in them. From the point of view of competi-
tion law, this type of action could be considered an abusive practice. It is impor-
tant to underline that the structural conditions on the cocoa market (with a li-
mited number of buyers who have integrated upstream in the producing coun-
tries) may favor such practices [20].
3.5. Impacts of Changes in the Chocolate Manufacturing and

Consumption Sector on the Overall Market Structure
In consumer countries, the chocolate manufacturing sector and the chocolate
consumption market have also undergone significant changes that are impacting
the overall market structure. This section therefore aims to provide a more de-
tailed explanation of these changes in the manufacturing sector and the con-
sumer market for chocolate. So, an inventory of fixtures is a necessity to better
perceive the issues facing the sector. The market for the manufacture and con-
sumption of chocolate is conditioned by the global supply of beans, which is

mainly made by African countries, Brazil, and Indonesia. Consumers being

mainly, the countries of the EU, the USA and new emerging countries like Chi-
na. Indeed, the cocoa supply market is facing a new dynamic that could bring
about a paradigm shift, especially with the arrival of emerging countries, which
constitute an important market for producing countries, which could lead to
shortage of cocoa supply.
3.5.1. A Shortage of Chocolate Is Looming in the World

While consumers of this sweet sweetness (chocolate) are still more numerous
and that global warming disrupts production, cocoa bean producers are unable
to meet the demand. The demand for chocolate continues to grow due in partic-
ular to the massive arrival of new consumers from emerging countries. “The
demand for this greed is exploding, especially in emerging markets, where con-
sumers are getting richer and producers around the world are struggling to
produce enough cocoa so that chocolate continues to flow,” said the very serious
Wall Street Journal recently. In 2013, the world consumed for the first time more
than four million tonnes of cocoa, 32% more than ten years ago. A surge in de-
mand that has pushed the price of the precious commodity by more than 9%
since the beginning of 2014 and nearly 40% in one year. In fact, producers have
not been able to meet the entire demand. The cocoa harvest is mainly carried out
by small independent farmers, mainly based in West African countries. Howev-
er, they are not able to invest to increase their productivity, especially since the
planting of new trees does not produce immediate effect since it takes at least ten
years for a cocoa tree to produce beans. Not to mention that many small pro-
ducers choose to turn away from this less lucrative crop than palm oil or rubber.
The threat of global warming would further aggravate the phenomenon of scar-
city. Rising temperatures are likely to affect cocoa crop [21].
A rise in the price of chocolate is also felt. Indeed, the price of the cocoa bean
should continue to grow. The International Chocolate Organization (ICCO)
predicts that demand will exceed production in the coming years, the longest
period of shortage since the organization publishes its statistics, since 1960, the
business daily warns. An increase led by China, where demand for cocoa is ex-
pected to increase by 5% per year until 2020, according to Euro Monitor Inter-
national. The price of chocolate and chocolate confectionery will inevitably rise,
warns Sterling Smith, a specialist in the cocoa market. Manufacturers such as
Mars or Nestlé will have to make a choice between increasing the final price of
their property to pass on the increase in the cost of production, reduce the size
of products sold or find a substitute for cocoa. Hershey has already started using
cocoa butter as a substitute for chocolate in many of its products. Conversely,
Michael Szyliowicz, co-founder of Mont Blanc Gourmet, had questioned his
customers to ask them if they would prefer to have the same products but at
higher prices or if they would prefer different products. The majority of custom-
ers opted for higher prices. It may be time to store the chocolate before its price
flies [22].

3.5.2. Chocolate Victim of the Economic Crisis

According to Cécile Chevré (2015), several reasons can be mentioned:
- rising demand, especially in emerging countries.
- the decline in production, which is threatened, among other things, by the
risk of Ebola becoming contagious in the main world producers such as Côte
d’Ivoire and Ghana. It is the risk of crop disruption that caused cocoa prices
to skyrocket in the fall.
- a greater concentration of cocoa players. These multinationals serve as in-
termediaries between the producers and the main buyers of beans, such as
chocolatiers or large agri-food groups (Nestlé, Mars, Mondelez, etc.). Gold
which says concentration says risks of movements more brutal on the prices
at the least news on the supply or the demand.
- Add to that the recent decision of the Swiss National Bank (SNB) to abandon
parity between the Swiss franc and the euro. As you most certainly know,
Switzerland has earned a reputation for choice in the world of chocolate.
Some of the biggest chocolatiers on the planet are Swiss: Lindt & Sprüngli
(SWX: LISN), Nestlé (SWX: NESN).
The rise in cocoa prices has already pushed chocolate makers and manufac-
turers to take several measures, both upstream and downstream. Upstream,
chocolate players have invested in producing countries to ensure sufficient pro-
duction. In 2012, US giant Mondelez International launched the $400 million
“Cocoa Life” program to support a responsible and sustainable cocoa sector. In
early 2014, the French chocolate group decided to invest 4 billion FCFA in the
construction of a processing plant in Côte d’Ivoire [23].
Downstream, many chocolatiers and agribusiness giants have decided to pass
on the rise in cocoa prices to consumers. Several strategies have been deployed
in recent years: price increases of course, but also and especially lower quality or
percentage of chocolate present in their products! It is a scandal! You must have
noticed the massive appearance of “customized” chocolate bars on the shelves.
The reason is simple: biscuits, caramel and other additions allow you to use less
chocolate, thus reducing costs while pushing up the labels. This is the power of
marketing and speculation. These strategies on the part of chocolate makers
were supposed to counterbalance the effects of speculation on the prices of the
bean. Cocoa has indeed become one of the commodities preferred by speculators
of all kinds on commodities. The most famous episode: in 2010, Anthony Ward,
called “Chocolate finger”, managed to explode the course of the bean on a spe-
culative blow to 1 billion dollars. Proof that despite the efforts of the main play-
ers in the sector, speculators still have a taste marked by the tablet, the fall of
30% of cocoa prices. Behind the collapse that has seen the ton of cocoa rise from
$3000 to $2000 an announcement that could upset the cocoa market in the
coming months: global demand is plummeting [24].
3.5.3. Chocolate, a Sign of a New Global Crisis?

The question is worth asking in the light of the latest figures published on the

amount of beans crushed on each continent. In the fourth quarter of 2014, it de-
creased 7.5% year on year in Europe, 2% in the United States (while a slight in-
crease was expected) and 21% in Malaysia. This is due to a sharp drop in the
demand for chocolate in Europe as well as in the United States, as a result of the
price increases imposed by chocolatiers and the food industry. The players in the
sector are banking on rising demand from emerging countries to offset the de-
cline in demand from traditional consumers such as Europeans and Americans.
These are still struggling to be seduced by the virtues of chocolate. As a remind-
er, the Chinese consume only 38 grams per year against 4 kg on average for the
French. Certainly, the margin of progress is important (the consumption of
chocolate increases by 30% per year in China) but we do not see the empire of
the Middle to convert massively to chocolate.
The announcement of a decline in cocoa consumption alone cannot explain
the collapse of 30% of prices. And all the more so since the classes have resumed
to regain their level of $3000. No doubt, speculators on commodities have once
again accentuated the movement. But what does the medium term reserve for
us? Despite falling demand, cocoa prices could remain at high levels while pro-
duction in Côte d’Ivoire and Ghana is threatened by weather conditions. In ad-
dition, in the long run, all analysts agree on one point: the scarcity threatens. In
November 2014, Barry Callebaut again pointed the finger at risk while the
March group expects a deficit of one million tonnes in 2020. What to increase
appetites for a global market estimated at 110 billion dollars in 2014 and this ex-
plains why Lindt’s action on the Swiss Stock Exchange has not flinched under
the news of the soaring franc but has even progressed in recent days. You will
now have to pay 55,000 Euros to buy a Lindt share.
The Swiss group Barry Callebaut, world leader in the sale of chocolate to pro-
fessionals, relies on measures stamped “sustainable development” to increase
cocoa production in Africa, to meet the growing demand for chocolate.
The world engulfs more cocoa than it produces. The deficit, measured by the
difference between milled beans and harvested beans, is expected to reach
115,000 tonnes this year according to the latest forecast by the International Co-
coa Organization (ICCO). If stocks are still sufficient to avoid a shortage, the
situation should not improve. Indeed, with the growth in emerging countries of
middle classes increasingly influenced by “Western” tastes, demand is likely to
explode. In China alone, it should rise from 5% to 6% per year until 2020. If the
consumption of chocolate in emerging countries increases to 2 kg per year and
per person against 50 grams currently, to get closer to the consumption in west-
ern countries (7 kg in France), the demand will be “difficult to satisfy”, worries
Juergen Steinneman, the director-general of Barry Callebaut, world leader in the
cocoa powder and chocolate markets. “It is estimated that by 2020, we will need
about a million additional tons of cocoa beans,” said Philippe Janvier, vice pres-
ident of Barry Callebaut in charge of the Europe zone.
A weakened production
For the number one supplier of the market, as for the more well-known

groups, the stakes are all the more important as production tends to decrease. In
addition to frequent concerns about political stability in producing countries,
Côte d’Ivoire being the most important, we must add diseases that weaken cul-
tures. Not to mention other factors such as rural exodus or competition from
other types of crops considered more profitable that would also weigh on pro-
duction. In the 2011/2012 and 2012/2013 seasons, production fell by 5.3% and
3.5% year-on-year, according to figures from the ICCO, but should rise again.
In the first line
Barry Callebaut likes to point out: one out of five consumer chocolate prod-
ucts comes (indirectly or not) from its factories. The company holds “25% mar-
ket share in the processing of cocoa beans,” says group CEO Juergen Steine-
mann. Suffice to say that in case of too much fluctuation, “we will be affected
first,” he warns. Also the way the company born in 1996 from the merger be-
tween the French Cacao Barry and the Belgian Callebaut does it to anticipate the
problem is not only crucial for the sector (Mondelez, Nestlé, etc. are its custom-
ers) but also rich in lessons.
Sustainable development
To secure its supply and get closer to these new markets, Barry Callebaut ac-
quired last year the cocoa business of Singaporean company Petra Foods. A way
to diversify its sources, nearly 60% of the raw material is now purchased in Côte
d’Ivoire and Ghana. For the future, the Zurich group relies above all on a model
of intensification of production via programs of sustainable development. He
organizes them alone, without the intermediary of specialized associations. It
focuses on improving productivity in Côte d’Ivoire’s plantations. Philippe Jan-
vier, also head of the brand in France, explains: “Thanks to more appropriate
cultivation techniques, we could easily double these yields. It is our responsibili-
ty to train farmers, to provide help to increase yields in Côte d’Ivoire of Ivory
and in other countries afterwards.”
No to GMOs
From 400 kg of beans per hectare, the Swiss company hopes to see the yield of
these plantations increase to 800 kg. And for that, she says she does not believe
in pesticides, fertilizers and even less GMOs. “For basic research, our research
and development centers focus on the properties of chocolate and cocoa for
health,” says Philippe Janvier. Genetically modified beans as used in Ecuador, for
example, would be unattractive in terms of taste and the big producers of GMOs
such as Monsanto would in any case find unattractive a market as small as co-
coa, compared to soybean, points Juergen Steinemann.
For the director of the Swiss group, the secret, “it’s training”. Teaching pro-
ducers how to better manage their crops, how to better maintain their land,
would be enough to increase their productivity and meet rising demand. The
group expects to invest 7 to 8 million Swiss francs in Ivory Coast this year (5.7 to
6.5 million euros).
Small farms
Responding to the risk of scarcity through sustainable development is an idea

shared by other players in this industry. Marc Blanchard, CEO of the Max Ha-
velaar association in France, told the Tribune at the end of April that policies to
support producers “can help rebalance supply and demand.” However, given the
structure of farms—often very small, between 2 and 3 hectares—and the multip-
licity of producers (750,000 in Côte d’Ivoire), only an ant work, on the spot,
could allow these projects to support producers to bear fruit.
Still the problem of child labor
Finally, these good intentions also displayed by the competitors do not pre-
vent the multinational chocolate companies from being regularly criticized by
human rights defenders, for example about child labor, or ecologists about the
environment. Regarding Barry Callebaut, if the Zurich group is rich in a fund to
fight against child labor in Africa, he was singled out in March 20013 by an
American NGO to be one of the lowest contributors with 100,000 dollars
committed per year between 2012 and 2014 against more than 900,000 by
March.
3.5.4. Chocolates Stuffed with Economic, Social and Environmental

Issues
In 2016, the cocoa sector is characterized by unequal relationships between
thousands of producers and producers of beans and some processing companies,
which has many negative impacts. This analysis attempts to understand the vi-
cious circle engendered by the mass chocolate market and the challenges to fair
trade to avoid the announced crisis and guarantee the food sovereignty of cocoa
farmers.
Agro-industry at the origin of an announced shortage
The standardization initiated over more than a century in order to ensure a
production of cocoa at constant quality, whatever the origin of the bean and
production practices. The cocoa bean has thus become a raw material subject to
speculation, the price of which varies according to world prices. The liberaliza-
tion of the sector at the end of the 1980s, which, by putting an end to various at-
tempts at international regulation, notably resulted in the arrival of the main
traders, ADM and Cargill, in the cocoa sector and led in reaction the merger of
Barry and Callebaut (now Barry Callebaut, world leader in cocoa processing).
Since then, these three players have dominated the global transformation of co-
coa and are strengthening their presence in producing countries while investing
in ever larger and more efficient processing plants.
Fair trade as an alternative for the sustainability of the sector at all levels
The establishment of cocoa prices in the countries of production that enable
producers and their families to meet their basic needs; The financial contribu-
tion of the cocoa sector to give the communities that live there the necessary
means to enable them to invest in local essential services and their local devel-
opment; Strengthening and developing cocoa farmers’ organizations that are
dynamic, appropriate and governed by their members; Promotion of the agrofo-
restry model at the heart of the cocoa sector; The development of chocolate value

chains that value the quality of cocoa and the original production from consum-
ers.
Challenges remain to be met for fair trade to be a real alternative to the
conventional model
In terms of support for producers, it is clear that, depending on the region, the
beneficial impacts of fair trade are more or less felt by the families of producers.
At the transformation stage, the complexity of the process, the necessary infra-
structure and the very high concentration of the sector mean that it is not easy to
get out of the “conventional” system. The chocolate industry is responsible for
illegal deforestation linked to cocoa farming in Côte d’Ivoire and Ghana, ac-
cording to Mighty Earth (January 2018).
The NGO Mighty Earth denounces the impacts of the chocolate industry on
the Ivorian and Ghanaian forest canopies (Espoir Olodo, 2017). Chocolate is not
only a luxury consumer product, it is also a source of destruction of many forest
covers in the main suppliers of raw materials that are Côte d’Ivoire and Ghana.
This is the main conclusion of Mighty Earth’s new report, “Bitter Deforestation
of Chocolate”. For the Organization, actors in the global chocolate industry, be
they traders (Barry Callebaut, Cargill and Olam) or chocolatiers (Hershey’s,
Nestle, Mondelez, Lindt and Ferrero), maintain deforestation in these two coun-
tries and provide raw material for cocoa plantations established in protected
areas. “We were able to identify seven cooperatives that bought cocoa from the
protected areas we visited, and then confirmed that they sold it to major interna-
tional traders like Cargill, Olam and Barry Callebaut. It is obvious that these
traders are responsible for creating a market for illegally grown cocoa, which
eventually gets into chocolate bars consumed around the world”, says the NGO.
“A study conducted by Ohio State University on 23 protected areas in Côte
d’Ivoire, concluded that seven of them had been almost entirely converted to
cocoa. Not far away, in Ghana, the world’s second-largest cocoa producer, the
situation is the same: between 2001 and 2014, 117,866 hectares of protected areas
were cleared and Ghana lost more than 7000 square kilometers of forest, at least
10% of its total forest cover; one-third of the country’s deforestation can be at-
tributed to activities related to the chocolate sector. Adds Mighty Earth. In re-
sponse to the recent commitment of 35 cocoa and chocolate companies around
the world, is the presentation of a framework for action leading to a cocoa
supply chain without deforestation next November at the 23rd Conference of the
Parties (COP23) in Germany. The Organization remains skeptical.” These com-
panies can make a huge difference because they together hold the overwhelming
majority of the chocolate and cocoa market. But for the moment, they have not
provided any details as to the exact nature of their program, which must be done
by the end of the year. For example, they have not yet guaranteed that future
crop expansions will be carried out without deforestation, in order to protect
landscapes with high carbon stock. Nor did they explain their action with regard
to cleared territories in Côte d’Ivoire’s national parks and protected areas. The

report says.
Thus, it emerges after analysis that the impact of changes in the consumer
manufacturing and consumption market in consumer countries on the struc-
ture of the market as a whole seems to be indicative of a sluggish market.
Problems related to supply scarcity, price volatility, challenges to fair trade,
environmental and social problems related to deforestation are some of the
factors that influence the structure of the market. Nevertheless, some solutions
are being taken by some multinationals (like Barry Callebaut) to sustain the
sector [25].
4. Challenges and Prospects for Reviving the Cocoa Sector in

Cameroon
 Research and Development
Cocoa research is carried out in Cameroon by IRAD, through its research on
stimulating plants, the related technical itineraries and the organoleptic qualities
of cocoa. It is a dynamic that IRAD has developed but which, unfortunately,
faded at the beginning of the 1990s with the disengagement of the State from
production activities. However, IRAD has a large gene bank on cocoa that can
produce varieties that can meet the criteria of productivity, competitiveness and
disease resistance. In terms of infrastructure, this institution has laboratories and
scientific workshops for the development of cocoa varieties.
In terms of support for research and development, the plan for the revival and
development of the coffee and cocoa sector (PRDFCC) will continue the pro-
duction of efficient and early basic plant material. To this end, IRAD’s capacities
will be strengthened, particularly in terms of infrastructure, equipment and hu-
man resources.
 Production
Since the implementation of the 2002 Recovery Plan, cocoa production has
evolved differently in terms of both quantity and quality.
On a quantitative level, the analysis of the evolution of cocoa production
(confers Table A1) shows that it has grown progressively in the period
2002/2011, from 140,000 tonnes in 2002 to 210,000 tonnes in 2011 with a peak of
228,500 tons in 2010 for an annual growth of about 5.9%. Despite the exceeding
of the cocoa production targets set by the 2002 stimulus plan of 200,000 tonnes
for the years 2010/2015, the estimated annual growth rate remains relatively low,
reaching the projected 600,000 tonnes in 2020. The need to step up existing ac-
tions and develop new ones is in fact necessary.
As regards quality, it has deteriorated considerably over time so as to begin
the Cameroon origin, particularly as regards cocoa beans. Indeed, Cameroonian
cocoa suffers from the non-respect of the different technical routes of the pre
and post-harvest operations. These important operations, even when they are
carried out, are not always in line with good practice, especially with regard to
Phytosanitary treatments, fermentation and drying. The smells of smoke and tar,

pesticide residues, and the virtual disappearance of grade I are the consequences.
The performance of the cocoa sector highlighted in this way is the result of the
fact that most small-scale producers, whose farms are mostly of the family type,
are atomized in all the production basins located in the appropriate agro-ecological
zones.
More and more, there is a craze for elites and other active or retired workers,
as well as young people trained in the renewal of agricultural education and
training, to settle in cocoa production. This new class of agricultural producers
or entrepreneurs, more open to innovation, represents an important potential
for the development of sectors. The operators of the sector benefit somehow
from the various services and supports offered by the public authorities and
other stakeholders through different projects and programs. The services offered
are mainly related to training, extension and agricultural information. The sup-
port is in cash or equipment such as plant material, fertilizers and pesticides and
equipment and small agricultural equipment. The size of cocoa orchards is cur-
rently poorly known. It is nevertheless estimated at 600.000 hectares for cocoa
trees.
Despite the overall upward trend in cocoa production between 2000 and 2016,
it must be recognized that the current performance of this sector remains below
potential, due to the constraints it faces [26].
 Marketing
The liberalization of cocoa marketing has profoundly changed the internal
and external marketing system, formerly implemented by the former ONCPB.
This situation has had a negative impact on the quality of the products, from the
purchase to the producers until the exportation and the delivery in the principal
ports of destination, which has started the image of the Cameroon origin on the
international market.
Internal marketing
The internal marketing of cocoa in Cameroon is governed by a legislative and
regulatory system, the application of which is revised at the beginning of the
campaign. However, having moved without transition from the state monopoly
system to full liberalization throughout the national territory, internal marketing
now induces an undifferentiated collection of field products and facilitates the
blending of qualities and harvests by farmers.
If the current marketing system now allows the producer, especially with re-
gard to cocoa, to receive a price representing more than 80 per cent of the inter-
national price, if the operators of the sectors can operate freely on all production
basins without concessions and without quotas, on the other hand, the general
environment of the marketing of the products remains gangrenous, and without
being exhaustive, by the dysfunctions hereafter: the absence of organized mar-
kets at the level of the producers; lack of pre quality control; the inadequacy of
the market information system; the proliferation of stakeholders and the lack of
professionalization; lack of funding for marketing operations and subsequent

vulnerability of producers; weak control of boarding; the insufficient application

of the texts in force; low adaptability to the global commodity economy; the ab-
sence of the State and/or the supervisory bodies of the sectors; weak collabora-
tion of stakeholders and obsolescence of the institutional framework; the disar-
ticulation of the die.
External marketing
As a result of the total liberalization decided in the 1990s, external marketing
is characterized, among other things, by: a multiplicity of stakeholders without
specifications; a fragmentation of the offer; a lack of follow-up after boarding
[27].
 The quality of the products
The liberalization of cocoa marketing has had a negative impact on quality.
Exporters have had a low propensity to seek improvements in product quality.
Indeed, the adoption in 1992 of the packaging standards of the French Associa-
tion of Cocoa Trade (AFCC), instead of those of the FAO used by the former
ONCPB, led to the degradation of the quality of the products. The Cameroonian
cocoa market is confronted with the non-respect of the technical itineraries,
notably the fermentation times and the humidity rate required by the regula-
tions. In the Southwest Region, where rainfall is over six (6) months, cocoa dry-
ing ovens have been popularized. The state of obsolescence and the lack of
maintenance of these ovens lead to the production of beans with strong smell of
smoke, rejected by the chocolatiers.
The decline in the quality of products and the change in the marketing system,
have strongly contributed to the negative evolution of the differentials of Came-
roonian labels on the international market. The quotation of the Cameroon ori-
gin has been on par with the international market since 2005, but the premium
on quality (“Good Fermented”) has disappeared. During the 2012 and 2013
campaigns, deliveries suffered penalties in the range of £40 to £ 80/MT, due to
their non-compliant quality [28].
 Product transformation
Several technological innovations have been developed in recent years. For
cocoa, beyond the grinding of beans, the processing of other parts of the fruit
makes it possible to produce products of various uses. The mucilage of the pod
makes it possible to produce sweetened or alcoholic drinks while the cortex can
be used in breeding and the mineral or organic fertilization of the plants (com-
post or potash fertilizers).
The constraints related to the transformation are: the weak infrastructural ca-
pacity and the lack of qualified personnel.
The recommended actions are: for research—the census and popularization of
product processing methods and the development of a catalog of existing inno-
vations (products and by-products)—the optimization of processing methods
that meet the standards of national and international quality—the rehabilita-
tion and development of technical research platforms in relation to modern
methods of transformation and training of trainers. Research/Extension Ser-

vices This will include: capacity building of producers, and other investors in
cocoa processing and stakeholder ownership of the relevant quality standard
legislation—Development and implementation of an effective financing plan for
product processing in conjunction with MINMIDT.
In Cameroon, a single processor has been installed for 60 years because of the
lack of incentives. The conversion rate is relatively low, about 15% of the nation-
al production.
The other producing countries are 43% for Côte d’Ivoire, 25% for Ghana, In-
donesia is now processing all its production, and becomes an importer of cocoa
to meet the need for installed capacity. Indeed, domestic production in these
countries is much larger than in Cameroon and therefore, the choice of the co-
coa sector has a greater impact on world prices in terms of price and premium
for the origin of cocoa; the quality of cocoa is better (controls on the ground
much more organized, disciplined and effective than in Cameroon regardless of
the marketing model adopted) [29].
 Constraints for the development of the cocoa sector
Technical constraints: they relate to the low productivity and competitiveness
(quality) of products. These are the result of no or bad application of the rec-
ommended technical itineraries, due to the difficulties of access to agricultural
inputs and services, the aging of planters and plantations.
Other constraints: these are organizational and institutional constraints,
which are linked on the one hand to the weak structuring of the producers, who
therefore do not always have the necessary weight in the negotiations and on the
other hand to the weakness of the coordination of the sector that gives free reign
to institutional interference that does not always benefit the sector.
The financing constraints are linked to the low level of funding in the sector
and the lack of appropriate mechanisms linked to the numerous interferences
that disperse the limited resources available. The FODECC (cocoa and coffee
development fund), which is the dedicated financing structure, is “competing”
with other structures that draw directly on the source of the royalty, when they
do not simply become additional financing geared towards the sector [30].
The natural constraints are those related to climate change that jostle the
agricultural calendar, making it unmanageable, with the frequent and non-cyclical
occurrence of diseases and pests often difficult to control.
In view of the above, the rapid development of cocoa production, to meet the
production challenges by 2020, requires the removal of the constraints thus
identified, and urgently those that have a rapid and short-term impact on prod-
uctivity. It therefore seems appropriate to accelerate the production and disse-
mination of seedlings in order to meet demand quickly, to facilitate the fertiliza-
tion of cocoa trees and to proceed with the complete protection of orchards; all
things that would increase the current yields by at least three, a necessary condi-
tion to increase production by at least 2.5 by 2020 and to reach or exceed the
production targets set [31].

5. Conclusions and Recommendation

The purpose of this paper was to present, in a general manner, the organization,
structure and operating mechanisms of the Cameroon cocoa market, particularly
the value chain from family farmers to consumers through exports; it also aimed
to highlight some issues and prospects related to the revival of the cocoa sector
in Cameroon. It shows that Cameroon, like most cocoa-producing countries,
also faces many difficulties not only externally, but also because of the interna-
tional environment (the volatility of the prices of export products), internally
through implemented policy measures, their consistency, and phasing, as well as
their deadlines. Starting from the liberalization of the sector in the early 1990s to
the devaluation of the CFA franc in January 1994, a relative stagnation of the
country’s agricultural performance has been noted so far. The problem is there-
fore not only structural but also cyclical. The corrective measures are envisaged,
for example, in the internal marketing of products, aim, inter alia, to: improve
the producer price; cushion the impact of international price fluctuations on
producer prices; restore the differentiated collection of products and the deteri-
oration of export quality; fight against the under-payments of the products, be-
cause of the difficulties of access to the places of purchase; improve the competi-
tiveness of cooperatives; institute a framework for consultation involving all
public and private stakeholders, under the coordination of the Branch Authority.
The government option of a return to stabilization will reaffirm the place and
the role of the State in the management of the sectors. With regard to the con-
straints related to external marketing, to remedy this, the government option for
external marketing is the establishment of a system of advanced sales, controlled
by the State, through centralization sales and monitoring of their quantitative
and qualitative execution to the ports of destination.
In addition, for the development of Cameroon’s artisanal, semi-industrial and
industrial processing industry in both cocoa and coffee roasting, it is recom-
mended that: strong support and protection of the local industry in order to at-
tract foreign investors and encourage local initiatives, with accompanying
measures that make cocoa processing more profitable in Cameroon as in other
producing countries, should be put in place.
Some recommendations in economics policy
1) With regard to the internal marketing of products, the aim here is to im-
prove the producer price; mitigate the impact of international price fluctuations
on producer prices; restore the differentiated collection of products and the de-
terioration of the quality of exports; fight against the underpayment of the
products, because of the difficulties of access to the places of purchase; improve
the competitiveness of cooperatives; establish a consultation framework involv-
ing all public and private stakeholders, under the coordination of the branch
authority. The government’s option of a return to stabilization will reaffirm the
place and role of the state in the management of the sector.

2) With regard to external marketing constraints, to remedy this, the govern-

ment option for external marketing should be put in place, together with a
state-controlled advanced sales system to centralize sales followed by their ex-
ecution destination.
3) Respect for international standards in terms of quality necessarily entails
the respect of technical itineraries in the production process. Industry experts
and the government must go in this direction to improve the perception of the
Cameroon label in the international market. In addition to the GI (Geographic
Indicator) approach, it also seems to be one of the ways to improve the quality of
cocoa from Cameroon.
In addition, the impact of changes in the consumer manufacturing and con-
sumption market in consumer countries on the market structure as a whole
seems to be indicative of a sluggish market. Problems related to supply scarci-
ty, price volatility, challenges to fair trade, environmental and social problems
related to deforestation are some of the factors that influence the structure of
the market. Nevertheless, some solutions are being taken by some multina-
tionals (like Barry Callebaut) to sustain the sector. However, one of the limita-
tions of this study is that we have not conducted a survey of producers and
professionals in the sector to better understand its operationalization. For this
purpose, therefore, future studies in this area field can be realized to further
this research.
Conflicts of Interest
The authors declare no conflicts of interest regarding the publication of this pa-
per.
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Appendix
Table A1. Total production, exports, local transformation, average prices on Cocoa
Farmers.
3) Local
1) Total Average prices
Years 2) Exports (tons) Transformation (tons)
production (tons) (Cfa)
(3) = (1)-(2)
2000 122,600 77,381 45,219 580
2001 122,100 109,796 12,304 700
2002 135,000 129,210 5790 700
2003 154,965 126,805 28,160 500
2004 176,754 169,773 6981 600
2005 170,000 163,701 6299 690
2006 169,553 168,159 1394 800
2007 212,619 131,075 81,544 937
2008 229,203 178,101 51,102 1152
2009 235,500 193,973 41,527 1853
2010 260,477 193,881 66,596 1491
2011 240,000 190,214 49,786 925
2012 268,941 173,794 95,147 900
2013 275,000 179,933 95,067 1095
2014 269,418 192,637 76,781 1250
2015 272,335 237,380 34,955 1500
2016 291,512 175,908 115,604 1050
Source: faostat/oncc, 2017.

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Theoretical Economics Letters, 2018, 8, 3223-3251

Cocoa Exports of Cameroon: Structure and

Ze Engamba Herve, Guiyu Zhao

College of Economics and Management, Jilin Agricultural University, Changchun, China

How to cite this paper: Herve, Z.E. and Abstract

DOI: 10.4236/tel.2018.814200 Oct. 30, 2018 3223 Theoretical Economics Letters

DOI: 10.4236/tel.2018.814200 3224 Theoretical Economics Letters

DOI: 10.4236/tel.2018.814200 3225 Theoretical Economics Letters

optimizing the competitiveness of products; the qualitative and quantitative im-

3. Organization and Stakeholders in the Sector

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 Companies under the supervision of the Ministry of Agriculture

3.1. Structure and Mechanism of Operation

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Graph 1. Cocoa sector in Cameroon.

3.2. Vertical Integration and Horizontal Concentration

DOI: 10.4236/tel.2018.814200 3229 Theoretical Economics Letters

Graph 2. Cocoa supply chain. Source: UNCTAD Secretariat, 2008.

and in the consuming countries (cocoa importers). In this sub-section, we will

DOI: 10.4236/tel.2018.814200 3230 Theoretical Economics Letters

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Graph 3. Internal marketing structures—Cameroon.

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DOI: 10.4236/tel.2018.814200 3233 Theoretical Economics Letters

3.3. International Organization and Structure of the Industry

DOI: 10.4236/tel.2018.814200 3234 Theoretical Economics Letters

The patterns of vertical integration and de-integration, horizontal concentra-

3.4. Concentration, Competition and Efficiency

DOI: 10.4236/tel.2018.814200 3235 Theoretical Economics Letters

DOI: 10.4236/tel.2018.814200 3236 Theoretical Economics Letters

3.5. Impacts of Changes in the Chocolate Manufacturing and

DOI: 10.4236/tel.2018.814200 3237 Theoretical Economics Letters

mainly made by African countries, Brazil, and Indonesia. Consumers being

3.5.1. A Shortage of Chocolate Is Looming in the World

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3.5.2. Chocolate Victim of the Economic Crisis

3.5.3. Chocolate, a Sign of a New Global Crisis?

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3.5.4. Chocolates Stuffed with Economic, Social and Environmental

DOI: 10.4236/tel.2018.814200 3242 Theoretical Economics Letters

DOI: 10.4236/tel.2018.814200 3243 Theoretical Economics Letters

4. Challenges and Prospects for Reviving the Cocoa Sector in

DOI: 10.4236/tel.2018.814200 3244 Theoretical Economics Letters

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vulnerability of producers; weak control of boarding; the insufficient application

DOI: 10.4236/tel.2018.814200 3246 Theoretical Economics Letters

DOI: 10.4236/tel.2018.814200 3247 Theoretical Economics Letters

5. Conclusions and Recommendation

DOI: 10.4236/tel.2018.814200 3248 Theoretical Economics Letters

2) With regard to external marketing constraints, to remedy this, the govern-

DOI: 10.4236/tel.2018.814200 3249 Theoretical Economics Letters

DOI: 10.4236/tel.2018.814200 3250 Theoretical Economics Letters

Documents de travail—Série G-24: Conférence des Nations Unies sur le commerce

2001 122,100 109,796 12,304 700

2002 135,000 129,210 5790 700

2003 154,965 126,805 28,160 500