Cocoa Thoughts 91


I attended a State Dinner in Accra a couple of nights ago in honour of President Ouatttara of Ivory Coast. Ghanaian President Nana Akuffo Addo made a speech which included the striking fact that Ghana and Ivory Coast produce between them 65% of the world’s cocoa, and yet receive only 5.5% of the income of the world chocolate industry.

This simple fact sums up much of the dilemma of Africa; stuck in primary commodity production and still, after decades of concentrated effort, unable to develop value added or to obtain a price for commodities – and particularly for farmers – that reflects their importance to the global value chain.

Cocoa has been one of the most successful areas of endeavour for the Fairtrade movement, but all of that has only resulted in that 5.5% figure, which without Fairtrade would be still lower. It is possible to buy Ghanaian made finished chocolate product in British supermarkets now, and excellent it is too, but it has a very small market share. Producing finished chocolate in Africa has its problems; chocolate is a much more delicate cargo than cocoa beans and reacts badly to either heat or refrigeration. Recipes which overcome this problem result in a certain harshness.

There has been some progress made in processing of the raw cocoa beans in Africa into butter and solids, but not on a scale which fundamentally affects the market.

The current Ghanaian government has made a major point of this issue. Here is Finance Minister Ken Ofori Atta addressing it at the G20 Summit for Africa earlier this year. There is however no desire by the political and corporate establishment of the developed world to assist in any way.

Cooperation with Ivory Coast is obviously key to progress, but the two countries lack the financial reserves that would be required to initiate effective cartelisation; while I have to admit, against my own inclinations, that a free market in sales by the cocoa farmers has provided a much better living to them than the decades of efforts at state monopoly or various forms of price intervention. In Ghana both the Minister of Trade and the Chairman of the Cocoa Board at the moment happen to be old friends of mine and I hope to discuss the possible ways forward with them over the next week or so.

The situation is even further complicated by the hypothecation of Ghana’s cocoa revenue some years ago to repay China for the Bui Hydroelectric dam project. This was always a very poor project in terms of design and available water in the Volta watershed, and has had a number of disastrous wildlife consequences. There has been a huge amount of trumpeting of Chinese “aid” projects in Africa, but my experience has been that they are even more designed to help the “donor” country than Western aid, and almost always turn out to be loan rather than grant. As with the Bui Dam project, this is usually disguised in a lack of transparency about the underlying financial arrangements, and the Chinese surge into Africa has ramped up levels of corruption still further.

All that is true throughout Africa. There has been a further development specific to Ghana. Chinese convict labour was imported to build the Bui Dam. Many of the workers absconded into the countryside, taking the earth moving equipment with them, and started illegal gold-mining. The result was the collapse of the rule of law in much of the Ghanaian countryside, and the Chinese criminal gangs introduced the widespread use of firearms to protect their illegal workings, know in Ghana as Galamsey. Word spread back to China and thousands of Chinese gang members started to arrive to join the illegal trade – of course facilitated by Ghanaian administrative corruption. The result has been a massive expansion in illegal working in Ghana with environmental consequences which include the complete devastation of several key watersheds and the wholesale pollution of community drinking water supplies.

I have known the Ankobra river for 20 years and I can assure you that, astonishing as it may be, the change is due not to seasonal factors but to illegal mining. The Pra was also until recently limpid.

As so often, Al Jazeera produces the best documentaries.

Western involvement in Africa has been a disastrous history of exploitation over six centuries, and still is. It is therefore very fashionable, particularly on the left in the West, but also in some African nationalist circles, to hail China’s surge into Africa as some sort of redress. It has always looked to me on the ground as the arrival of yet another group of rapacious neo-imperialists to exploit Africa, and every year of observation has confirmed my view, which like most of my views is not fashionable.

A recent study concluded that Chinese aid is as effective in African development as Western aid. All I can say is, that is an extraordinarily low bar.

I don’t eat much chocolate nowadays. My alarming girth is entirely the product of the drinks industry. But the other day little Cameron gave me one of his chocolate buttons, and I was absolutely shocked by the unpleasant oily texture that instantly developed, and the lack of cocoa flavour in the overly sweet taste. I have never been a chocolate snob and always enjoyed the Cadbury’s Dairy Milk flavour. But the concoction of sugar and palm oil that so quickly developed in my mouth bore no relation to Cadbury’s Dairy Milk before Kraft/Mondolez took it over. A quick google revealed they deny they have changed the recipe.

Despite all the problems, the emerging economies of Africa continue the trend of the last 20 years of growing at a faster rate than Europe or the United States. My rather unconventional suggestion is that the African states concerned should look to their improved capital formation and ability to borrow, to buy in to the major western chocolate manufacturers in a big way. Perhaps in collaboration with China, which is sitting on trillions of dollars. It will take that sort of radical shift in market conditions for the problem Nana Addo so rightly identified, to be addressed.


91 thoughts on “Cocoa Thoughts

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  • nevermind

    Was the UK ambassador and or High commission also invited to the dinner you attended? What did they say to such cartel control?

    • freddy

      Roughly two-thirds of the entire world’s cocoa is produced in West Africa, with 43% sourced from Ivory Coast,
      where child labor is a common practice to obtain the product

    • craig Post author

      Nevermind,

      I don’t know if he was there. He would have been towards the back with the diplomats and other members of the hoi polloi, so naturally I did not encounter him.

      Craig

      • fredi

        while I have to admit, against my own inclinations, that a free market in sales by the cocoa farmers has provided a much better living to them than the decades of efforts at state monopoly or various forms of price intervention.

        In the space of a few weeks CM surprises again with words I would never expect from him. I guess that’s why this blog is a good one. The territory where the so called left,right, conservative, progressive, anarchist, libertarian, authoritarian, and the many others can meet and maybe just the once in a while actually agree on something is a very positive thing.

  • Conjunction

    Fascinating.

    45 years ago I spent three months in West Africa myself and I always enjoy your relatively rare writings about Ghana and other African nations, as of course I did your book.

  • giyane

    About as far off topic as you can get, sorry about that. here is a commentator on the Kurdish independence bid disaster. Kurdish families who assisted the Peshmerga near Kirkuk had their houses completely destroyed by Abadi’s Iranian troops. They have fled to other cities, homeless and destitute.

    http://www.zerohedge.com/news/2017-10-18/barzanis-failed-kurdistan-project-deathblow-partition-iraq-and-syria

    The author writes as a politician, not as a realist. howver stupid Barzani may have been in signing for Daesh to come to attack Baghdad, and then grabbing Kirkuk from Baghdad, Abadi has slaughtered his own Iraqi citizens. Scots please take note. Here is a political analyst approving of Culloden-style activities in the name of regional politics.

    I can’t imagine why he concludes that Kurdish Independence is now on its death-bed. By slaughtering his own citizens using a foreign army which has benefitted enourmously from the Peshmerga over countless years of conflict, Abadi has strengthened the resolve of the Kurdish to reject rule by Baghdad.
    Where there was previously good-will and patience, there will now be festering discontent. The unity of Iraq is what is now dead.

    Abadi forgets, and will live to regret his folly, that powerful actors are playing politics in the Middle East. Something little puppets from the nest of spies in London really shouldn’t forget.

  • Paul Barbara

    ‘Despite its reputation, Chinese aid is quite effective’: http://www.informationclearinghouse.info/48050.htm

    ‘…The trouble for America and other Western powers is that China has stolen a march on them in terms of cultivating investments and harnessing resources across Africa. Under President Xi Jinping, China has investment projects worth an estimated $60 billion in dozens of African countries. This is way ahead of what the Americans or Europeans have invested.

    Earlier this year, China opened its first ever overseas military base, in the East African country of Djibouti. That’s still small news compared with the reported 46 military bases that the US has across the continent.
    Beijing said its new military facilities in Djibouti are to secure vital shipping routes against piracy in the Gulf of Aden. That may be partly true. But there is also the factor of China wanting a security foothold in a continent where it has staked so much of its future economic growth plans.

    The big difference between the US and China is that while Beijing has devoted most of its resources to developing trade and industry with African states, Washington’s emphasis is on military relations.

    China has gained much respect from African nations for its genuine commitment to partnership. It is bringing capital and technology to Africa and gaining access to natural resources of oil and gas, metals and other minerals. Unlike the old European colonialism, China’s involvement in Africa is based on partnership and mutual development. For access to raw materials, China has built schools, universities, telecommunications and transport networks, which are all helping the continent reach its huge potential.

    The Americans like the Europeans are stuck in an “extractive mentality” when it comes to Africa. But today, American capitalism is broke. It can’t even invest in its own nation never mind Africa….’

    ‘Blackwater in Somalia?’: http://www.pravdareport.com/hotspots/conflicts/13-01-2010/111632-blackwater-0/#comments

    ‘Reuters reports a spokesperson from the Islamist Al-Shabaab group in Somalia claiming that the US mercenary group Blackwater/Xe Services is in Somalia, is recruiting and is planning a series of spectacular terrorist attacks against civilians to discredit his movement in Mogadishu.

    The spokesperson is Sheikh Ali Mohammed Rage of the Al-Shabaab group (The Youth), an Islamist faction fighting government forces in southern and central Somalia. In an interview with Reuters, he claimed that mercenaries from Blackwater (now called Xe Services) have started planning bomb plots in Mogadishu to discredit Al-Shabaab.

    “US agencies are going to launch suicide bombings in public places in Mogadishu. They have tried it in Algeria, Pakistan and Afghanistan”. He added that the target will be the market of Bakara. The source apparently warned a meeting of tribal elders that Xe Services (formerly Blackwater) has entered Somalia and has already started recruiting operationals to carry out its attacks….’

    Seems the US is interested in manipulating African countries through their militaries, like they did all over Latin America, and uses ‘Terrorists’ as an excuse for their military presence, as they do in Syria..
    Somalia, of course, was one of the 7 governments Wesley Clark was told in 2001 were to be overthrown in 5 years.

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