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The minute moth Conopomorpha cramerella is a dainty insect that poses a serious threat to the cacao industry in Southeast Asia – the cocoa pod borer. This insect is responsible for losses to the Indonesian cacao industry of some $500 million annually, and unfortunately, it has been reported from northern Australia. Cacao is also attacked by two lepidopterans (Eulophonotus myrmeleon and Zeuzera coffeae) and a weevil (various Pantorhytes species), which bore through the stem of the tree, causing considerable damage. This chapter examines the life cycles of these cocoa pod borers and cocoa stem borers and looks at how an understanding of their biology and ecology can help to manage these pests.

This chapter details a study of commodity value chain compression for coffee, cocoa, and sugar. The study uses time series data of prices along entire commodity chains from raw material in a commodity exporting developing country to final retail produce in a developed consuming country, in order to provide descriptive analysis of the evolution of farm gate-to-retail price spreads. Comparisons are made across the commodities studied and across countries in order to provide insight into the causes of changes in the farm gate-to-retail price spread over time.

This chapter deals with the history of cacao and cocoa, from its primary center of diversity in the Amazon basin to its cultivation in numerous countries across the humid lowland tropics. It covers the use of cocoa by pre-Colombian cultures from more than 5000 years ago to the Mayans and Aztecs, its “discovery” by Columbus in the late fifteenth century, and its popularity in Europe from the sixteenth century to the present. It follows the journey of this remarkable plant, from use of its beans as currency in Central America until the early to mid-nineteenth century, through to its place at the center of a multi-billion-dollar global chocolate industry.

This chapter looks at both the Theobroma cacao tree and its cultivation. It covers cacao botany: its unusual habit of cauliflory, where the flowers, and hence the pods, arise directly from the trunk and main branches of the tree; pollination of its flowers, which is linked with the ecology of the rain forest in which it grows; and dispersal of its seeds, which is almost unique in its dependency on vertebrate animals such as monkeys, bats, and squirrels. The chapter also deals with the cultivation of cacao, mostly by smallholder farmers on individual, family-managed farms, typically 0.5 –7 ha in size, in the lowland tropical regions of Latin America, West Africa, and Indonesia. Finally, the chapter examines the impact of the increasing demand for chocolate on the push towards the intensification of cocoa cultivation, threatening to shift production even further from the traditionally managed, sustainable cultivation systems of the past.

Reasons for children to engage in labor are discussed including poverty, gender roles and political conflict. Types of labor examined include street children, working on farms, in factories or mines, or in the sex trade. The vast majority of children work in agriculture; children in countries as varied as India, Ecuador and the United States are performing work too strenuous for their developing bodies, using dangerous equipment meant for adults and are exposed to toxic pesticides. The issue of child labor involved in chocolate production is included as well. Types of work performed by street children, children in factories and mining are also examined, as well as children who choose to participate in the sex trade. Suggestions for the reduction of child labor are analyzed.

This chapter constructs a data series on real cocoa prices extending back to 1850, and uses this series to model cocoa price dynamics. Cocoa prices are characterized by long (approximately 25-year) cycles, which arise out of the combination of the long productive life (more than 40 years) of cocoa trees and the lack of mean or trend reversion in cocoa consumption. Although harvest shocks are the main factor contributing to year-to-year price volatility, shifts in the taste for chocolate and other cocoa products are more important in explaining long-term price movements. A forecasting exercise indicates that sustainable cocoa production will very probably involve higher prices than those observed over the recent past.

This chapter reviews the history of commodity exchanges trading coffee, sugar, and cocoa. Much of the earliest trading of coffee (and other commodities) took place in coffeehouses. It is impossible not to make a mental leap to modern-day coffee shops and Starbucks franchises, where many a fledgling business is launched these days. Furthermore, most of the ingredients in the iced double cappuccinos fueling those entrepreneurial pursuits are affected by commodities market trade. Multinational conglomerates, like Nestlé and J. M. Smucker (owner of Folgers Coffee), certainly avail themselves of the commodities exchanges to help buffer against the price swings that can drive up the cost of their key ingredients (and cut into operating profits). The story of the coffee, sugar, and cocoa markets can be traced to the East Coast, and to New York in particular. Of the triumvirate that would one day compose the Coffee, Sugar, and Cocoa Exchange (CSCE), the New York Coffee Exchange was established first, followed by the New York Coffee and Sugar Exchange and the New York Cocoa Exchange.

The history of the chocolate industry is a long process of industrial acquisitions, mergers, and restructuring, which leads to a high degree of horizontal concentration. We explore the changes in the power relationships at different stages of the cocoa–chocolate chain through an analysis of the price paid to the cocoa grower in Côte d’Ivoire, the world price of semi-processed products, and the retail price of a tablet of chocolate sold in France. The bipolar structure of the chocolate industry suggests that cocoa processors are not in a position to set prices for semi-finished cocoa products and couverture above the competitive market price. The chocolate manufacturers, engaged in a strategy of product differentiation, are more likely to be responsible for the rigidity of the chocolate price to downward shocks in the cocoa price.

The objective in this chapter is to review the history of slave labour in the cocoa industry, including forced labour and unpaid child labour, to illustrate how governments often collaborate with the cocoa industry to create and perpetuate these abuses. Slavery in the cocoa industray is a serious form of food crime affecting husdreds of thousands of workers in the cocoa industry. The chapter traces the history of slavery in the cocoa industry from the arrival of Europeans in the Americas in the late fifteenth century to its contemporary forms in West Africa. It illustrates the often explicit but somemtimes passive complicity of governments in creating and protecting the slave trade in the name of protecting both private commericial interests as well as the interests of the State. Some of the proposed solutions to ending the slave trade in the cocoa industry are also discussed.

This chapter explores one case of primary-commodity liberalization in some detail: cocoa in West Africa. It is organized as follows. Section 4.2 discusses the economics of liberalization, while Section 4.3 highlights certain aspects of the world cocoa market, particularly in relation to market liberalization. Section 4.4 looks at the direct consequences of liberalization and globalization in the world cocoa market. Section 4.5 presents a world cocoa market model; Section 4.6 indicates the beneficiaries of market liberalization based on the results of the model simulations; and Section 4.7 concludes. A commentary is also included at the end of the chapter.

The chapter tells the story of capital flight from Côte d’Ivoire, focusing on the cocoa sector. The impressive economic growth fueled by cocoa exports after independence, once hailed as the “Ivorian miracle,” evaporated after the collapse of cocoa prices and the explosion of foreign debt. As the country plunged into an economic crisis, followed by a political crisis that culminated in civil war, the primary commodity sector continued to be highly vulnerable to illicit financial flows. The chapter traces the continuities and changes across political regimes since independence in the mechanisms of resource rent capture and personal enrichment and the roles of the key national and foreign players. It shows how the patronage nexus linking state power to market power contributed to large-scale capital flight and the failure of the country to take full advantage of its natural resource endowments.

The East Asian economic turmoil of 1997 and its lingering effects belie the decade of unprecedented economic growth in the Southeast Asian region. This economic boom saw a significant increase in the per capita income of the population of the respective countries and a corresponding rise in the standards of living. The decade also saw increased government spending on infrastructural development of basic amenities, including irrigation extension and rural water supply. The demand for and consumption of water increased significantly in both cities and the rural areas. In contrast to the escalating demand for water by the economies of the Southeast Asian countries, available resources remain limited despite the fact that the region generally receives more rainfall than it loses through evaporation annually. Annual, seasonal, and spatial variations in the rainfall within and between countries on the one hand, and accelerated demands for water from the various sectors of the economy on the other, put a severe strain on the available water resource base. In addition, natural resources in the form of rivers, groundwater storage, and lakes are rapidly diminishing in quality as a result of domestic, agricultural, and industrial waste discharges. In the coastal plains, excessive groundwater abstraction resulting in salt-water intrusion has affected groundwater resources. Inland, and in the watershed areas, rapid and extensive development has been at the expense of forested land, which has given way to new urban centres and residential and industrial complexes, while uncontrolled logging and shifting agriculture have caused the deterioration of the remaining forested ecosystem and natural watersheds. Given these factors, the future water resources scenario of the region seems bleak unless urgent steps are taken to manage seriously the resources in a judicious and sustainable way. Water will certainly feature as an important issue of development in the region in the decades ahead, given that large population concentrations and economic development are located in the lower parts of river basins. This chapter describes the hydrological conditions of the Southeast Asian region and examines the nature and extent of water resources that have been put to use for rural and agricultural development.

This chapter considers the rapid expansion of cocoa production in Europe’s tropical colonies. It outlines the development of plantation cultivation and the challenges it faced, and lays particular emphasis on the role of smallholders in the global cocoa boom of the colonial era, above all in West Africa. It emphasizes the extraordinary growth of cocoa production in West Africa and how it built on existing land-use patterns, yet also traces the links to estate production in other parts of the world, especially the Caribbean, which was the key agronomic reference point during the period. Despite the remarkable success of West African farmers’ extensive cultivation practices, which reflected a sound knowledge of ecological and economic circumstances, colonial policy was marked by a strong partiality towards intensive production techniques under centralized European management. As this chapter demonstrates, such cultural predilections could not compensate for the material advantages of smallholder cocoa.

The title of the book is The Economics of Chocolate, but this volume is about more than economics in the narrow sense of the word. Instead, it addresses issues that are of interest to economists, and uses economic concepts and frameworks to analyse developments in cocoa production and chocolate consumption. However, many contributions cover fields such as geography, history, political science, psychology, nutrition, and so on. This chapter introduces the different sections of the book and presents an overview of all the varied contributions, from cocoa beans in Aztec and Mayan history, through French, Belgian, and Swiss small-scale artisans to multinationals, to the health effects (or not) of chocolate, fair trade, and the new emerging chocolate markets.

This chapter reviews cocoa and chocolate production, consumption, and the industrial organization of chocolate making throughout history. Cocoa production and consumption was, for a long time, restricted to Central America. Centuries after the Spanish discovery of the New World, the cultivation of cocoa beans and the consumption of chocolate spread around the world during the early modern times (1500–1800). Scientific discoveries in the 18th and 19th centuries, and the Industrial Revolution, transformed the cocoa and chocolate industry and increased demand. The 20th century was characterized by a large increase in cocoa production and chocolate consumption, and the emergence of West Africa as the dominant cocoa-producing region. The past 20 years have seen a new boom in demand, this time driven by growth in emerging markets, a growing concentration in global value chains, and the spread of private standards related to sustainability and ethical sourcing.

Significant institutional transformations are occurring along the contemporary cocoa–chocolate value chain. Drawing on field research from Indonesia and Ghana, this chapter identifies the largely unprecedented emergence of enhanced corporate regulatory influence over the world’s cocoa farmers, framed by a discourse of ‘sustainability’ and the need to sustain supplies of cheap cocoa. These emergent institutional forms of governance weave together an amalgam of state-led regulatory and service delivery functions with the sourcing and brand management functions of lead firms. This presents both opportunities and significant risks for producer communities. Critically, corporate interests will not always align with the developmental interests of rural communities, and dependence on lead firms for technology development and social facilities exposes communities to specific risks should a new cocoa frontier emerge elsewhere and lead firms decide to shift their sourcing operations.