Cocoa

Cocoa Production in Ivory Coast, Indonesia, and Dominican Republic

Question:

Discuss About The Farming Of World Leading Producer Countries?

The Ivory Coast is the leading producer of cocoa in the world with 30 percent of the world’s total cocoa being supplied to some of the leading companies around the world like Nestle or Cadbury (Han 2016).

The country is the third largest producer of cocoa the production has began not more than 25 years ago, as an African dominated industry the export of Indonesian cocoa quickly gained popularity (Indonesia-investments.com 2018).

There are two kinds of cocoa produced in the country: Sanchez is a buttery, cheaper kind of beans and Hispaniola which is a drier, better-fermented bean. Economy country produces some of the finest quality cocoa several luxurious chocolate makers love working with cocoa beans grown here (Worldatlas.com 2018).

	Côte d'Ivoire	Indonesia	Dominican Republic
Political	Stable government and provided support	The government encourages trade and is also stable in terms of relation with other countries	Supportive government
Economy	The economy of the country is mostly dependent on agriculture and cocoa beans play a very significant role	Doesn’t contribute much to the economy of the country	Cocoa is one of the key constituents of the economy
Social	Though the leading producer of cocoa beans in the world the farmers of Ivory Coast are facing financial crisis due to the fall in the price of cocoa beans since the end of 2015, because of the market dynamics of demand and supply (Han 2016).	Because the prospects seem to be low in the farmers are shifting to more lucrative farming options like palm oil and rubber (Indonesia-investments.com 2018).
Technological		There is lack of financial means and technology causing a decline in productions due to diseases, aging trees, floods etc.	The country is free of some of the diseases which are common in other countries and also use technology in production
Environmental			Sustainable agriculture encouraged by the government (Berlan and Bergés 2013)
Legal		Imposing of an export tax on raw cocoa beans (Fowler and Coutel 2017)	“Fairtrade-certified” production (Pozo et al. 2013).

Only one percent of the world’s chocolate market consumes cocoa produced in Peru, rather Peru has grown to be the largest producer of Cocaine which is made by processing cocoa leaves (Vaast et al. 2016).

Disease in plantation has been one of the major reasons for the continuous decline of production of Cocoa in Mexico (Worldatlas.com 2018). There has been large investment from multinational companies from around the world but the export quantity of cocoa is lower than the import quantity.

	Peru	Mexico
Political	The government has been supportive in terms of trading	The federal government of Mexico have been investing in encouraging the farmers
Economy	Regarded as one of the most stable economies in Latin America	Heavy investment from companies like Hershey and Ferrero.
Social	The farmers mostly have land areas ranging from 0.5 and 10ha of and 60% of the small farmers are not organized in cooperatives.	Farmers have opted for other substitute crops that have greater profit potential (Vaast et al. 2016).
Technological	Technology and science is used in the agriculture to improve the quality of the output.	new hybrid plants have been introduced to tackle the situation
Environmental		toxicity and environmental are prevalent
Legal	The taxation policies and regulations encourage the trade in the country

The outbreak of the Witches’ Broom fungus killed thousands of trees and reduced average production in 2000 from once largest producers in the world (Teixeira 2016).

Cameroon ranks sixth in the production list of cocoa in the world. But erratic and prolonged rains have caused the production to decrease in the last years. Another reason that has been recognized for this downfall is poor management of the industry (Läderach et al 2013).

	Brazil	Cameroon
Political	The government of brazil has been planning an agricultural improvement with the farmers in the country	The government is planning to rise the production by 2020 so that the farmers may get support from the output.
Economy	Imports cocoa from Ghana	Agriculture plays an important role in the economy of the country (Teixeira 2016)
Social	There is an urge to learn and educate among the farmers which has encouraged many changes in the production (Worldatlas.com 2018).	Almost around 80 percent of the population is involved in agriculture.
Technological	Installed processing centers which will allow production boost	The government with the help of improved technology is persuading the improvement of the crops (Teixeira 2016)
Environmental		Extreme weather conditions in the region can be harmful for the crops
Legal	There has been labour laws, import and export rules supporting the agriculture and industry.

Despite the cocoa crop given the reputation of a king there has been serious lack of corporate control. Though cocoa production is significant in the economy of the country and the major cash crop there has been issues with weather conditions (Goldberg 2015) decreasing area of cultivation, low yields per hectare, incidence of pests and diseases, and non-adoption of research recommendations (Dormon et al. 2004). Ghana is in the second position when it comes to world production.

This country has observed a fall in the production of cocoa in the recent years but unlike other countries discussed above, the country has been investing in several opportunities to improve the situation (Worldatlas.com 2018).

	Ghana	Nigeria
Political	A guaranteed fixed price to the farmers as all cocoa must be sold through the government it forms a major part of the foreign exchange for the country.	The government has been supporting and encouraging the growth of the cocoa industry.
Economy	Cocoa is the major cash crop and is a significant part of the economy of the country.	Cocoa is the leading agricultural export of the country
Social	Most of the farmers who grow the cocoa crops own and maintain their lands by themselves.	There has been an issue of gender discrimination in the cocoa industry where men and women performing the same task are paid differently.
Technological	World cocoa foundation has been incorporating and helping farmers in understanding and improved technology for cocoa production the program is called Digital Green (Afoakwa 2014).	Agriculture and cocoa production incorporates cutting edge technology, early-maturing, high-yielding, disease-resistant beans have been incorporated in the corps (Afoakwa 2014)
Environmental	Sustainable means of agriculture has been adapted by many farmers.	The environmental conditions of the country are perfect for the growth and nourishment of the crops
Legal	There are favorable laws and regulations encouraging the industry.	There is potential and opportunity in the market but there is no proper management of the system.

Hershey’s is one of the largest manufacturers of Chocolate in the world; this American organisation was established in 1886 by Milton Hershey. But it was not until 1894 that the brand was invented with the Hershey’s cocoa. The price and the availability of chocolates among the common people made the brand stand out from the rest of the competitors back then. Chocolate in America was considered to be a luxurious item until Hershey’s made the product and the price available for the common public. The idea was to spread happiness with sweet treats and Hershey also took care of the employees and the well-being of the people. Hershey is a multinational company which operates in the North America to distribute and sells traditional chocolates, sugar confectionery and other treats in Canada and the United States. The segment in which the company operates in provides licenses to third parties and operates manufacturing plants outside the home country (Hersheys.com 2018).

Economy, Political, Social, Technological and Environmental Conditions Impacting Cocoa Production

Hershey’s is the chocolate market leader in America the following figure depicts the position of the company in 2017.

This is an industry analysis and will help in identifying the growing shortage of cocoa production in the international market.

In order for a new company to invest in this industry there is a large capital involved in the manufacturing process which is the main barrier in the market. Apart from that a new company can be a threat to the operations in terms of innovation, lower pricing strategy and providing new value propositions to the customers. There is also warning regarding a major shortage in the production of cocoa beans by 2020 which would mean barrier to new entrants (Ford et al. 2014).

The bargaining power of the suppliers are moderate as there is a number of reasons like climatic change and deceases that is impacting the cocoa supply of the world, the dynamics of the industry is also changing, as cocoa beans do not have substitute in chocolate industry the suppliers position is high but again because the product has been significantly low the power decreases (Ford et al. 2014).

The switching cost of the buyers are low as there is a number of competitors in the market hence the company have to keep up with the price and quality to ensure sales hence the bargaining power of the buyers are high.

Sugar confectionaries, white chocolate, chocolate free desserts, fruit pulp or other flavors such as vanilla or lavender etc are some of the substitute to chocolate (Hersheys.com 2018).

There is intense competition in the market, some of the direct competitors are: Nestle, Cadbury, Mars etc

Reference list:

Afoakwa, E.O., 2014. Cocoa production and processing psychology. CRC Press.

Berlan, A. and Bergés, A., 2013. Cocoa production in the Dominican Republic: sustainability, challenges and opportunities. Commissioned by Green & Black’s.

Dormon, E.N.A., Van Huis, A., Leeuwis, C., Obeng-Ofori, D. and Sakyi-Dawson, O., 2004. Causes of low productivity of cocoa in Ghana: farmers' perspectives and insights from research and the socio-political establishment. NJAS-Wageningen journal of life sciences, 52(3-4), pp.237-259.

Ford,, T., Vit,, J., Neate,, R., Branigan and, T. and Saner, E., 2014. The cocoa crisis: why the world’s stash of chocolate is melting away. [online] Theguardian.com. Available at: https://www.theguardian.com/lifeandstyle/2014/nov/21/cocoa-crisis-world-chocolate-stash-melting-away [Accessed 11 Mar. 2018].

Fowler, M.S. and Coutel, F., 2017. Cocoa beans: from tree to factory. Beckett's Industrial Chocolate Manufacture and Use, pp.9-49.

Goldberg, S., 2015. Ghana’s Inept Policies Driving Cocoa Shortage. [online] Wallstreetdaily.com. Available at: https://www.wallstreetdaily.com/2015/06/29/ghana-cocoa-shortage/ [Accessed 11 Mar. 2018].

Han, E., 2016. Bitter battle: chocolate makers fighting to save the world's cocoa supply. [online] Smh.com.au. Available at: https://www.smh.com.au/business/companies/bitter-battle-chocolate-makers-fighting-to-save-the-worlds-cocoa-supply-20160323-gnpfg4.html [Accessed 11 Mar. 2018].

Hersheys.com., 2018. Our story. [online] hersheys.com. Available at: https://www.hersheys.com/en_us/our-story/our-history.html [Accessed 11 Mar. 2018].

Indonesia-investments.com., 2018. COCOA. [online] Indonesia-investments.com. Available at: https://www.indonesia-investments.com/business/commodities/cocoa/item241? [Accessed 11 Mar. 2018].

Läderach, P., Martinez-Valle, A., Schroth, G. and Castro, N., 2013. Predicting the future climatic suitability for cocoa farming of the world’s leading producer countries, Ghana and Côte d’Ivoire. Climatic change, 119(3-4), pp.841-854.

Pozo, S., Sanchez-Fung, J. and Santos-Paulino, A.U., 2013. Economics development strategies in the Dominican Republic. Achieving development success: strategies and lessons from the developing world, pp.383-405.

Teixeira, M., 2016. Brazil cocoa output to recover in 2016/17, industry eyes expansion. [online] reuters.com. Available at: https://af.reuters.com/article/commodities07News/idAFL8N1DQ46D [Accessed 11 Mar. 2018].

Vaast, P., Harmand, J.M., Rapidel, B., Jagoret, P. and Deheuvels, O., 2016. Coffee and cocoa production in Agroforestry—a climate-smart agriculture model. In Climate Change and Agriculture Worldwide (pp. 209-224). Springer, Dordrecht.

Worldatlas.com (2018). Top 10 Cocoa Producing Countries. [online] Worldatlas.com. Available at: https://www.worldatlas.com/articles/top-10-cocoa-producing-countries.html [Accessed 11 Mar. 2018].

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