Chapter 8. Cocoa and cotton commodity chains in West Africa 277
firms find Cameroonian partners, and straddle through these exporting agents, operating in domestic
and international markets but not as exporters per se. It is not evident that attempts to reduce market
power of oligopolistic multinational firms have been effective, with the exception of export taxation,
which may capture rents that would have otherwise gone to those firms.
Fostering stronger producer organizations is another goal of market institutional development. Aid
projects have worked to strengthen cooperatives, and governments have provided subsidized loans
to cooperatives. Inter-professional organizations have been created to try to give farmers more voice
in policy matters influencing these markets. Aid projects have also pursued – with some success –
new market institutional structures involving public/private partnerships. A number of innovations can
be seen along the cotton and cocoa value chain as liberalization has occurred, some of which have
improved the positions of smallholder farmers.
- Successful innovations
In spite of the problems cited above, some interventions have resulted in innovations along the value
chain that have raised income for some farmers. These include efforts to establish more effective
producer organizations, niche market solutions – notably fair trade – efforts to provide credit, and
efforts by multinational exporting firms to improve market institutions.
5.1 Producer organizations
Much emphasis has been placed on the role of more effective producer organizations to increase
farm income. In the past, producer organizations in Africa have concentrated on negotiating with
parastatal boards and the government to determine the official price for cocoa or cotton. To the extent
that those parastatals held market power, the producer organizations would countervail against the
market power of traders and exporters. Effective producer organizations also function as competition
for traders, providing the same trade in services – buying and selling the commodity that traders also
buy. In addition, producer organizations have served as vehicles for provision of credit and inputs to
farmers. Many of the functions performed by producer organizations are simply the business of a
trading entity. Producer organizations may therefore play both a political role and an economic role.
In the case of cotton, inter-professional boards (IPB) have been created in some countries to negotiate
with the cotton gins to establish official producer prices and to represent the interests of producers.
Producers are included as members of those boards. These boards emphasize the political aspects
that are also pursued by producer organizations, negotiating the terms of sale for cocoa or cotton.
This remains an appropriate function in the case of cotton, when regional monopolies persist, but
if a market is privatized and price is determined in that market, the political function of a producer
organization or an IPB becomes irrelevant. One problem with producer organizations is that often too
much emphasis is placed on political rather than economic functioning, in an environment where they
no longer have countervailing market power and prices are not determined by negotiation.
The more effective producer organizations (cooperatives) have become effective businesses which earn
price premiums for their members. In the area of marketing, STCP has worked to support Cameroonian
producer organizations in their efforts to become traders and to achieve better prices for their members.