TOWARDS MORE SOCIALLY RESPONSIBLE COCOA TRADE

Cocoa is a classic Third World cash crop. It is produced mostly by small, poor farmers in Africa, while its products - chocolate and sun tan oil - are consumed by rich consumers in North America and Europe. A few West African economies are highly dependent on foreign exchange earned from cocoa sales. It has therefore been targeted by Oxfam's Fair Trade initiative, and IITA's Sustainable Tree Crops Program (STCP) is launching an effort of become more aligned with consumer's social preferences. The most obvious dimension to addressing consumer demand for cocoa products is to insure provision of high quality products, which has become problematic since structural adjustment programs have dismantled the African parastatals governing cocoa production and exports. Cocoa production would also likely meet requirements for organic certification in many instances, but legitimately obtaining that certification would be costly. Cocoa also offers several dimensions through which consumers might, by their market choices, insure more socially responsible outcomes. Both the STCP and Fair Trade initiatives focus on the potential for poverty alleviation and on achieving sustainable development for poor African farmers. Those farmers are stewards of the rain forest, and their production decisions can determine whether cocoa remains a rain forest friendly crop, so global environmental impacts can also be influenced by cocoa markets. The most recent, most widely publicized, and most intractable issue to hit the cocoa market is the allegation that child labor may be used on those poor African cocoa farms. The first objective of this paper will be to describe this situation, and the problems of cocoa markets, focusing on what has been happening in Africa. Particular attention will be paid to the problems of implementing structural adjustment reforms, and the increasing role played by multi-national processors as they backward integrate into the African marketing systems. Then the Fair Trade and STCP initiatives will be described. Finally, a conceptual examination of marketing systems between the African cocoa farm and the chocolate manufacturer, emphasizing institutional arrangements, is used to assess the likely success of these initiatives in achieving their social goals.Institutional and Behavioral Economics, International Relations/Trade,

CAN U.S. AGRICULTURE PRODUCE THE BASIC FOODSTUFFS CONSISTENT WITH THE DIETARY GUIDELINES?

Food Consumption/Nutrition/Food Safety,

PREFERENTIAL TRADE ARRANGEMENTS IN APPAREL EXPORTS FROM THE CARIBBEAN TO THE U.S.: A DYNAMIC INVESTMENT APPROACH

A dynamic profit maximization model with adjustment costs of capital is implemented to study US outward processing trade in apparel and to examine the effects of preferential trade policies in the long and short runs. The model is used to determine the role of foreign investment and to simulate outcomes due to the introduction of the Trade and Development Act of 2000 and the elimination of Multi-Fiber Agreement quotas in selected Caribbean countries. The transitional dynamics as well as long-run costs and benefits of these trade policy changes are evaluated. While outward processing trade expands with preferences under the Caribbean Basin Initiative, policies typically require five years to be fully effective, and competition in freer markets could reverse the benefits realized under preferential trade.International Relations/Trade,

Price Elasticities of Key Agricultural Commodities in China

We estimate a simultaneous equations model of Chinese markets for wheat, rice, corn, pork, and poultry. Elasticities for consumption, feed demand, production, stocks demand, and foreign trade fall within the range of results from previous studies, and are reasonable magnitudes. China has market power in the trade for all commodities.Marketing,

WHEAT-IMPORTING STATE TRADING ENTERPRISES: IMPACTS ON THE WORLD WHEAT MARKET

The U.S. is seeking further disciplines on STEs in upcoming WTO negotiations on agriculture. The prevalence and reform of state trading among wheat importers is examined. Behavior investigated across countries and over time includes domestic price stabilization, world price transmission, import levels and sources, and grain quality.International Relations/Trade,

Market Power and Structural Adjustment: The Case of West African Cocoa Market Liberalization

Liberalization of the cocoa market in West Africa, due to structural adjustment reforms, has resulted in the elimination of para-statal marketing boards and initiated the creation of new institutions to replace the marketing services of those agencies. Concerns have been raised as to the effects of these reforms on prices of cocoa received by farmers, welfare measures and competitiveness of marketing channels. Of particular importance is backward integration of multinational processing firms, who take over exporting activities and may collect rents previously captured as export taxes. This paper uses a conjectural variations approach to estimate the degree of market power present in the post-liberalized cocoa bean markets of Ivory Coast and Nigeria. Evidence of market power is found in the Ivory Coast markets between the farmgate and U.S./EU15 imports. The market power, exercised by multinational exporter/processors, must be considered in concert with the Ivorian government who is still collecting export taxes. In contrast, no evidence of market power is found in the Nigerian markets or domestic (farmer to trader) markets of Ivory Coast.Marketing,

What’s Driving Food Prices in 2011?

Agricultural Finance, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety,

Distortions to Agricultural Incentives in Cote d’Ivoire

Distorted incentives, agricultural and trade policy reforms, national agricultural development, Agricultural and Food Policy, International Relations/Trade, F13, F14, Q17, Q18,

PREFERENTIAL TRADE OF AGRICULTURAL COMMODITIES IN THE CARIBBEAN BASIN

Preferential agricultural trade under the Caribbean Basin Initiative has been beneficial to participating countries, particularly for differentiated goods. Goods that have not performed well were either subject to policy changes, eroding preferences and deteriorating market trends or structural changes that diminished CBI exports.International Relations/Trade,

EXPORT COMPETITION: ISSUES AND OPTIONS IN THE AGRICULTURAL NEGOTIATIONS

International Relations/Trade,