Chapter 8. Cocoa and cotton commodity chains in West Africa 257
These West African countries have faced volatile world markets for these commodities for decades.
Figure 1 shows monthly international price indices for cocoa and cotton from 1970 to 2011 (IMF,
2012). Those indices are all equal to 100 in 2005. Figure 1 shows that cocoa and cotton prices have
exhibited greater volatility than agricultural prices generally (as represented by the international food
price index of the International Monetary Fund [IMF, 2012]). In the case of cocoa, the International
Cocoa Organization (ICCO) price – an average of prices on the New York and London commodity
exchanges – is typically used to gauge world prices. International cotton prices are determined from
the Cotlook A index, based on quotations for far eastern delivery of lint from key exporting sources
worldwide as reported in Cotton Outlook by Cotlook.^4 In 1970 both cocoa and cotton prices were half
the values they had in 2005. From the late 1970s until 1981 cocoa prices were nearly triple their 2005
levels and cotton prices were nearly double. Cotton prices were nearly double their 2005 levels in 1996,
as well, and cocoa prices in 2010 were more than twice their 2005 levels. Cocoa prices generally fell
from 1985 until the commodity price run-up beginning in 2007, and they were late among agricultural
commodities to exhibit increases. Cotton prices have been highly volatile, and have fallen since the
mid-1990s due in part to competition from synthetic fibers and new production technologies based
on biotechnology (Genetically Modified Organisms - GMOs). They did not show the extreme increases
experienced by other agricultural commodities in 2007 and 2008, but spiked later as land was removed
from cotton production worldwide. Both variability of world prices and downward trends in those
prices have posed problems for farmers in West Africa as well as for public institutions seeking to
influence farmgate prices. Public institutions have historically taxed and stabilized farmgate prices,
but downward trends in prices have limited the ability of governments to extract tax revenue through
explicit or implicit means.
Table 2. Gross Production Value (GPV) as a Share of Agricultural Production, Value Added from
Agriculture and GDP, 2005 and 2009 (Cont.)
Seed cotton Cocoa beans
Country GPV as a % of 2005 2009 2005 2009
Ghana Agriculture 0,10 0,10 8,98 6,31
Value Added 0,20 0,16 18,28 10,28
GDP 0,07 0,05 6,85 3,19Mali Agriculture 6,92 1,46
Value Added 11,91 ..
GDP 4,02 1,08Nigeria Agriculture 0,42 0,40 1,09 0,93
Value Added 0,79 .. 2,08 ..
GDP 0,26 0,19 0,67 0,44Source : FAO, FAOSTAT, 2012 for gross production value in agriculture, seed cotton and cocoa beans World
Bank, 2012, World Development Indicators for value added from agriculture and GDP.