The EC is to support an extension of initial support to cocoa sector restructuring in Jamaica under the ‘Re-engineering the Cocoa Rural Economy through Agro-processing and Eco-Tourism and Entrepreneurship’ (RECREATE) project. The first stage, implemented through the Cocoa Industry Board, successfully rehabilitated 2000 acres of neglected cocoa fields. This second-stage programme seeks to improve cocoa nursery infrastructure, in order to facilitate an expansion of the area under fine cocoa and to provide support to cocoa field management, value-added processing, farmer training and small rural business development.
According to the Jamaican Minister of Agriculture, Roger Clarke, Jamaica stands ‘on the threshold of a major turnaround towards consistent supply and value-added niche marketing’ of cocoa and cocoa products. It is hoped that success of the EU-supported scheme will stimulate private sector investment in the cocoa sector.
Elsewhere in the Caribbean, St Vincent & the Grenadines is looking to develop cocoa production in association with the commodity trader Armajaro. The trading company is to provide training to local farmers in exchange for becoming the sole buyer of the fine-flavoured, high-value premium cocoa produced. It seeks to build on the informal production and marketing of cocoa which already take place. This forms part of Armajaro’s positioning strategy to capitalise on growing demand for chocolate in emerging markets, particularly Asia.
According to the Prime Minister of St Vincent & the Grenadines, Ralph Gonsalves, the deal ‘provides a chance for some of the land that was cultivating bananas to go into cocoa’. Some 500 acres is to be placed under cocoa in mid 2012, to be expanded to 5,000 acres within 5 years if the initial trial proves successful. This would then yield production of between 2,500 and 3,000 tonnes.
According to Reuters, ‘global cocoa demand is on course to outstrip supply in the coming years as aging trees and a lack of investment in some of the world's top producers limit production.’ Other Caribbean countries are also showing a growing interest in cocoa, while the region’s largest cocoa producer, the Dominican Republic, ‘ranks among the world's 10 leading producers’.
Jamaica and St Vincent & the Grenadines represent two different approaches to developing the cocoa sector. One is based on the traditional, government-sponsored development project approach, while the other is a government-promoted arrangement with a global commodity trading company keen to position itself to meet expanding global demand for cocoa to serve growing and increasingly differentiated global chocolate markets.
Both approaches, however, are likely to face a common challenge: how to regulate and strengthen the functioning of the cocoa supply chain in order to ensure that primary producers of quality-differentiated cocoa secure the full value of the price premium associated with the quality of cocoa produced.
In meeting this challenge, Caribbean governments in the cocoa and other sectors could potentially draw lessons from the EU’s efforts to strengthen the functioning of agricultural supply chains in the context of large inequalities in power relationships that exist in many agricultural supply chains. To date, EU analysis of this issue has given rise to a number of potential areas for public policy intervention. These include:
- extending support to strengthening producer organisations, including their negotiating capacity;
- promoting sustainable and market-based relationships between stakeholders in the supply chain by identifying ‘unfair contractual practices stemming from asymmetries in bargaining power’;
- promoting increased transparency in price formation by supporting price comparison services and monitoring ‘potential abuses’;
- where necessary, drafting standard contracts for use by stakeholders within the sector, to promote transparency in key financial aspects of contractual arrangements.
These can be complemented by provision of extension services to progressively improve quality, combat diseases and reduce post-harvest losses and support to independent grading.