Chapter 8. Cocoa and cotton commodity chains in West Africa 263
farmgate price in Cameroon also follows the ICCO price after liberalization in the early 1990s. Prices
in Côte d’Ivoire and Ghana exhibit stability and are substantially below the ICCO price. The effects of
liberalization in 1999 in Côte d’Ivoire, followed by reinstituting export taxes in 2003 at the beginning
of the civil war, are also evident. Moreover, the steep recent increase in world cocoa prices is seen in
prices in Côte d’Ivoire and Ghana, with substantial export taxation persisting. Margins of chocolate
manufacturers and cocoa processors also vary with world cocoa prices.
Figure 3. Cocoa Producer (Farmgate) Prices Compared to the ICCO Price, 1970-2007
*Prices in USD per metric ton.
Sources: FAO, FAOSTAT, 2010 and Abbott and Wilcox, 2004 for farmgate prices.
IMF, International Financial Statistics, 2010 for ICCO price.
Figure 4 shows a stylized value chain for cotton in West Africa based on Baffes (2007) description of
the cotton market and a value chain drawn by RATES (2005) for Tanzania. Farmers sell seed cotton to
ginners’ agents, traders or producer organizations. Parastatal or private gins transform seed cotton to
cotton lint at an outtake ratio of about 40 percent. Cotton prices may be reported on a seed cotton or
lint basis, using the uptake ratio and cost estimates to move from one to the other. Lint may be sold to
local spinners and textile manufacturers to support domestic textile and clothing industries but it is more
frequently sold to international traders in West Africa. In the export market cotton lint is sold to yarn
fabric and textile manufacturers, who in turn sell products to industrial apparel manufacturers. World
cotton prices are reported as the A index, a measure of prices at borders of countries importing lint.
050010001500200025003000350040001971 1975 1979 1983 1987 1991 1995 1999 2003 2007ICCO
Cameroon
Côte dIvoire
Ghana
Nigeria