Should Ivory Coast nationalize its cocoa industry?

Now that Ivory Coast has rid itself of its criminal former president Laurent Gbagbo, Alassane Ouattara — the country’s new president — can get on with the task of governing this west African country, long known as an economic powerhouse. Ivory Coast’s world-class agricultural endowment is cocoa, and its farmers have historically produced the largest annual crop in the world.

Ten years of civil war, and electoral frustrations cost Ivory Coast its preeminent global position, which is now likely held by neighboring Ghana. In a well-reported article on the problems of Ivory Coast’s cocoa farmers, James North in The Nation argues that large European and American cocoa buyers, notably Cargill, ADM and the big Swiss firm, Barry Callebaut, are terribly “exploiting” Ivorian farmers. North, while admirably cataloging the abuses by brokers and dishonest middlemen in the cocoa value chain, proposes no solution to the problem, other than suggesting that Western consumers of chocolate ought to refuse to tolerate “this injustice,” implying that perhaps a consumer boycott would help.

Strangely, given North’s long history of reporting for left-wing and progressive journals, he makes no mention of a potential solution open to Ivory Coast’s government: the well-established practice, in Ghana, of having the state serve as the sole buyer and broker of Ghanaian cocoa. As the sole buyer, the Ghana Cocoa Board, an arm of the government, sets terms and prices for cocoa, and serves as a supplier of inputs and expertise for Ghana’s many cocoa farmers. Undoubtedly, the cocoa board penalizes some farmers because it pays prices well below the level of the world market. The Ghana government pockets the difference on the grounds that the nation should benefit as a whole from cocoa — and that farmers are receiving some benefits from a system that frees them from the Darwinian competition — dog eat dog — that James North insists undercuts and immiserates cocoa farmers in neighboring Ivory Coast.

There’s a long and tangled history to the political economy of cocoa in West Africa — too long and tangled to go into here. The relevant point is that Ghana’s form of state socialism once delivered poorer results than Ivory Coast’s liberal, free market approach, where farmers sold to whomever they wished and pocketed all of their winnings. With cocoa prices at record high levels, the market-oriented approach is failing Ivorian farmers, while rewarding those in Ghana, where the government posssesses enormous leverage over the global cartel of cocoa buyers because of a shortage in this essential bean.

For Ouattara, the case for emulating Ghana is clear. Nationalizing cocoa could also be an instrument for bringing some sanity and equity to rural Ivory Coast. Ghanaian technocrats could assist in this process, and the two countries, working in concert, would amass even stronger market power over cocoa, perhaps leading to price increases. Exploitation of producers — virtually all of whom are farmers who work their own small plots of land — would decline. And the shattered Ivorian state would demonstrate a new avenue for delivering public goods to its strife-weary citizens. Networks of cocoa farmers would require direct assistance from the Ivorian state — in the form of fertilizers, storage services and other inputs. These networks could then be used to “piggyback” other social goods, such as education for women and children, health services, and even lessons in conflict resolution techniques.

The failure to imagine new possibilities in African politics often bedevils reformers who appear stuck in a rut, powerless to transcend old patterns of failure. Yet in the case of cocoa, alternatives are not idealistic but are working — right across the border.

– G. Pascal Zachary blogs at Africa Works.