Trade Reforms and Integration of Cocoa Farmers into World Markets: Evidence from African and non-African Countries

Abstract

KeywordsCocoa markets farmers price transmission error correction model A B S T R A C TThe paper analyses cocoa farmers' integration into global markets taking into account trade reforms in five cocoa producing countries. The analysis investigates price transmission mechanisms from world to domestic cocoa markets in the context of trade liberalizing policy reforms. The empirical analysis of this study is carried out within the framework of the Error Correction Model. The results, while being mixed, suggest that the reforms have increased the exposure of farmers to world cocoa markets. However, this development is not associated with significant increases in the share of the world price accruing to farmers in cocoa major producing countries. For a sustainable cocoa economy, policies that create an enabling environment for farmers are critical.

Structure and performance of cassava markets: challenges of food security and connecting small farmers to markets in Cameroon

“…Bonanno et al (2018) suggest that market integration is a necessary but not sufficient condition for market efficiency. Nonetheless, most studies (Abdulai, 2007;Minot, 2011;Myers and Jayne, 2012;Abidoye and Labuschagne, 2014;Burke and Myers, 2014;Fricke and Muratori, 2017;Nakawuka et al, 2018;Pierre and Kaminski, 2019;Tsowou and Gayi, 2019) in the region are focused on analyzing market integration and efficiency. Many studies in developing countries, such as Africa and Asia, utilize regression (Abdulai, 2000;Tostão and Brorsen, 2005;Myers, 2013;Minten et al, 2014) and correlation (Harriss, 1979;Ravallion, 1986;Goodwin and Schroeder, 1991;Rosenzweig and Binswanger, 1993;Chaudhuri and Ligas, 2009) analyses of pricing to highlight some semblance of market efficiency or market performance.…”