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Does Market Liberalization Jeopardize Export Quality? Cameroonian Cocoa, 1995-2000

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  • Gilbert, Christopher L
  • Tollens, Eric
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    Abstract

    A frequently encountered argument against the liberalization of markets for tropical crop commodities is that this may jeopardize export quality. We look at this argument in the specific case of Cameroonian cocoa exports. The Cameroonian experience is important because an alleged decline in cocoa quality has often been cited as illustrating the dangers of market liberalization. That claim is not supported by examination of the unit value of cocoa imports into the European Union which demonstrates constant relativities over time in the unit value of cocoa imports from major west African producers. We argue that, in a liberalized environment, export quality is determined by the preferences of market participants and the technology of quality production. In Cameroon, changes in transport technology resulted in a diminished demand for premium grade cocoa while increased competition from cocoa buyers resulted in a transfer of some processing functions from farmers to intermediaries. There is no evidence of any significant quality problems arising from market liberalization. We conclude that government does not need to regulate in order to ensure a normal commercial outcome. Concerns about export quality should not be an issue in the continuing African market liberalization debate.

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    Bibliographic Info

    Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3224.

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    Date of creation: Feb 2002
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    Handle: RePEc:cpr:ceprdp:3224

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    Keywords: cocoa; liberalization; quality;

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    1. Knudsen, Odin & Nash, John, 1990. "Domestic Price Stabilization Schemes in Developing Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 38(3), pages 539-58, April.
    2. Gilbert, Christopher L., 1996. "International Commodity Agreements: An obituary notice," World Development, Elsevier, vol. 24(1), pages 1-19, January.
    3. Banerjee, Anindya & Hendry, David F, 1992. "Testing Integration and Cointegration: An Overview," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 225-55, August.
    4. Takamasa Akiyama & John Baffes & Donald Larson & Panos Varangis, 2001. "Commodity Market Reforms : Lessons of Two Decades," World Bank Publications, The World Bank, number 13852, October.
    5. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November.
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