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LOCAL COMMODITY EXCHANGES COULD IMPROVE COCOA SUPPLY CHAIN

LOCAL COMMODITY EXCHANGES COULD IMPROVE COCOA SUPPLY CHAIN



Commodity exchanges for cocoa in producing counties might not have an impact on the price of cocoa but could help the supply chain.

Speaking at the 2018 World Cocoa Conference in Berlin in May, Professor Christopher Gilbert, who is associated with the Bologna Institute for Policy Research and John Hopkins School of Advanced International Studies, said exchanges are unlikely to have any impact on cocoa price volatility but have the potential to improve the functioning of the cocoa value chain.

Exchanges would be local, operated in conjunction with a national auction, he explained. “They could improve quality assurance, facilitate credit provision and, depending on current regulatory structures, price transmission,” Professor Gilbert said.

However, there are questions to be answered about local exchanges. “An exchange is likely to involve an auction system,” he noted. “Will it be obligatory to sell through an exchange auction or will the auction coexist with private sales?

“An exchange system also imposes additional costs. Will the benefits to farmers of an exchange system exceed the costs?”

As he also noted, different producing countries organise the cocoa value chain in different ways and exchanges would need to mesh with these arrangements.

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