IDEAS home Printed from https://ideas.repec.org/p/ipt/eapoaf/202505.html
   My bibliography  Save this paper

An Analysis of Cocoa Market Fundamentals and Price Transmission in the Cocoa Value Chain

Author

Listed:

Abstract

After two decades of substantial stagnation, with consequent complaints from producer countries, the international price of cocoa beans has suddenly started to dramatically rise, attracting interest on this commodity, that is a fundamental source of income for millions of smallholders around the world. The present paper offers a broad analysis of the cocoa sector, divided into two main components: an investigation of the cocoa market fundamentals and an assessment of the price transmission inside the cocoa value chain. Both analyses rely on a Vector Error Correction Model, with yearly data (1961-2022) for the evaluation of market fundamentals and monthly data (January 1996-July 2024) for the price transmission investigation. An analysis of structural breaks is conducted in both cases. While the yearly market analysis, that combines prices and quantities, does not present structural breaks except for the price of cocoa beans, all residuals and predicted cointegrated equations of the price transmission analysis show a structural break.

Suggested Citation

  • Rogna Marco & Tillie Pascal, 2025. "An Analysis of Cocoa Market Fundamentals and Price Transmission in the Cocoa Value Chain," JRC Working Papers on Economic Analysis of Policies for Africa 2025-05, Joint Research Centre.
    • Handle: RePEc:ipt:eapoaf:202505
    as

    Download full text from publisher

    File URL: https://publications.jrc.ec.europa.eu/repository/handle/JRC142155
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Creti, Anna & Joëts, Marc & Mignon, Valérie, 2013. "On the links between stock and commodity markets' volatility," Energy Economics, Elsevier, vol. 37(C), pages 16-28.
    2. Catherine Araujo Bonjean & Jean-François Brun, 2008. "Pouvoir de marché dans la filière cacao : l'hypothèse de Prebisch – Singer revisitée," Economie & Prévision, La Documentation Française, vol. 0(5), pages 133-144.
    3. repec:dau:papers:123456789/14980 is not listed on IDEAS
    4. Justina A. Onumah, & Portia Adade Williams, & Wilhelmina Quaye & Mavis Akuffobea & Edward, E. Onumah, 2014. "Smallholder Cocoa Farmers Access to On/Off-Farm Support Services and its Contribution to Output in the Eastern Region of Ghana," Asian Journal of Agriculture and rural Development, Asian Economic and Social Society, vol. 4(10), pages 484-495, October.
    5. Zivot, Eric & Andrews, Donald W K, 2002. "Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 25-44, January.
    6. Onumah, Justina A. & Williams, Portia Adade & Quaye, Wilhelmina & Akuffobea, Mavis & Onumah, Edward E., 2014. "Smallholder Cocoa Farmers Access to On/Off-Farm Support Services and its Contribution to Output in the Eastern Region of Ghana," Asian Journal of Agriculture and Rural Development, Asian Economic and Social Society (AESS), vol. 4(10), pages 1-12, October.
    7. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    8. Bensch, Gunther & Kaestner, Kathrin & Vance, Colin, 2023. "Pass-through of cocoa prices along the supply chain: What's left for farmers in Côte D'Ivoire?," Ruhr Economic Papers 1035, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    9. Justina A Onumah & Portia Adade Williams & Wilhelmina Quaye & Mavis Akuffobea & Mavis Akuffobea, 2014. "Smallholder Cocoa Farmers Access to On/Off-Farm Support Services and its Contribution to Output in the Eastern Region of Ghana," Asian Journal of Agriculture and Rural Development, Asian Economic and Social Society, vol. 4(10), pages 484-495.
    10. Cornelia Staritz & Bernhard Tröster & Jan Grumiller & Felix Maile, 2023. "Price-Setting Power in Global Value Chains: The Cases of Price Stabilisation in the Cocoa Sectors in Côte d’Ivoire and Ghana," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 35(4), pages 840-868, August.
    11. Ameyaw, Emmanuel, 2024. "Business cycles in a cocoa and gold economy: Commodity price shocks do not always matter," Resources Policy, Elsevier, vol. 91(C).
    12. Anthony Mananyi & John J. Struthers, 1997. "Cocoa market efficiency: a cointegration approach," Journal of Economic Studies, Emerald Group Publishing, vol. 24(3), pages 141-151, September.
    13. Anthony Mananyi & John J. Struthers, 1997. "Cocoa market efficiency: a cointegration approach," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 24(3), pages 141-151, June.
    14. Christopher L. Gilbert, 2024. "Cocoa: Origin Differentials and the Living Income Differential," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 36(4), pages 777-802, August.
    15. F. Traoré & F. Badolo, 2016. "On the co-movement between coffee and cocoa prices in international markets," Applied Economics, Taylor & Francis Journals, vol. 48(40), pages 3877-3886, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mighri, Zouheir & Ragoubi, Hanen & Sarwar, Suleman & Wang, Yihan, 2022. "Quantile Granger causality between US stock market indices and precious metal prices," Resources Policy, Elsevier, vol. 76(C).
    2. Paul Gallimore & J. Andrew Hansz & Wikrom Prombutr & Ying Zhang, 2014. "Long-term Cointegrative and Short-term Causal Relations among U.S. Real Estate Sectors," International Real Estate Review, Global Social Science Institute, vol. 17(3), pages 359-394.
    3. Silin Liu & Lei Luo, 2023. "A Study on the Impact of Ideological and Political Education of Ecological Civilization on College Students’ Willingness to Act Pro-Environment: Evidence from China," IJERPH, MDPI, vol. 20(3), pages 1-17, January.
    4. Lei Luo & Dakuan Qiao & Ruixin Zhang & Chenhao Luo & Xinhong Fu & Yuying Liu, 2022. "Research on the Influence of Education of Farmers’ Cooperatives on the Adoption of Green Prevention and Control Technologies by Members: Evidence from Rural China," IJERPH, MDPI, vol. 19(10), pages 1-17, May.
    5. Paul Gallimore & J. Andrew Hansz & Wikrom Prombutr & Ying Zhang, 2014. "Long-term Cointegrative and Short-term Causal Relations among U.S. Real Estate Sectors," International Real Estate Review, Asian Real Estate Society, vol. 17(3), pages 359-394.
    6. Vincent Brémond & Emmanuel Hache & Tovonony Razafindrabe, 2016. "The Oil Price and Exchange Rate Relationship Revisited: A time-varying VAR parameter approach," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 13(1), pages 97-131, June.
    7. Singh, Prakash & Pandey, Manoj K., 2009. "Structural break, stability and demand for money in India," MPRA Paper 15425, University Library of Munich, Germany.
    8. Paresh Kumar Narayan & Seema Narayan, 2008. "Do Permanent Shocks Explain Income Levels? A Common Cycle–Common Trend Analysis Of Regional Income Levels For China," Pacific Economic Review, Wiley Blackwell, vol. 13(5), pages 656-662, December.
    9. Wilton Bernardino & João B. Amaral & Nelson L. Paes & Raydonal Ospina & José L. Távora, 2022. "A statistical investigation of a stock valuation model," SN Business & Economics, Springer, vol. 2(8), pages 1-25, August.
    10. Brittle, Shane, 2009. "Ricardian Equivalence and the Efficacy of Fiscal Policy in Australia," Economics Working Papers wp09-10, School of Economics, University of Wollongong, NSW, Australia.
    11. Gómez-Puig, Marta & Sosvilla-Rivero, Simón, 2014. "Causality and contagion in EMU sovereign debt markets," International Review of Economics & Finance, Elsevier, vol. 33(C), pages 12-27.
    12. Tomiwa Sunday Adebayo & Abraham Ayobamiji Awosusi & Seun Damola Oladipupo & Ephraim Bonah Agyekum & Arunkumar Jayakumar & Nallapaneni Manoj Kumar, 2021. "Dominance of Fossil Fuels in Japan’s National Energy Mix and Implications for Environmental Sustainability," IJERPH, MDPI, vol. 18(14), pages 1-20, July.
    13. Natanelov, Valeri & McKenzie, Andrew M. & Van Huylenbroeck, Guido, 2013. "Crude oil–corn–ethanol – nexus: A contextual approach," Energy Policy, Elsevier, vol. 63(C), pages 504-513.
    14. Bashiri Behmiri, Niaz & Pires Manso, José R., 2012. "Does Portuguese economy support crude oil conservation hypothesis?," Energy Policy, Elsevier, vol. 45(C), pages 628-634.
    15. Guan, Jialin & Kirikkaleli, Dervis & Bibi, Ayesha & Zhang, Weike, 2020. "Natural resources rents nexus with financial development in the presence of globalization: Is the “resource curse” exist or myth?," Resources Policy, Elsevier, vol. 66(C).
    16. Garg, Bhavesh & Prabheesh, K.P., 2021. "Testing the intertemporal sustainability of current account in the presence of endogenous structural breaks: Evidence from the top deficit countries," Economic Modelling, Elsevier, vol. 97(C), pages 365-379.
    17. Martin T. Bohl & Alexander Pütz & Pierre L. Siklos & Christoph Sulewski, 2018. "Information Transmission under Increasing Political Tension – Evidence for the Berlin Produce Exchange 1887-1896," CQE Working Papers 7618, Center for Quantitative Economics (CQE), University of Muenster.
    18. Solomon P. Nathaniel & Festus V. Bekun, 2020. "Electricity Consumption, Urbanization and Economic Growth in Nigeria: New Insights from Combined Cointegration amidst Structural Breaks," Research Africa Network Working Papers 20/013, Research Africa Network (RAN).
    19. Muhammad Shahbaz & Hrushikesh Mallick & Mantu Kumar Mahalik & Shawkat Hammoudeh, 2018. "Is globalization detrimental to financial development? Further evidence from a very large emerging economy with significant orientation towards policies," Applied Economics, Taylor & Francis Journals, vol. 50(6), pages 574-595, February.
    20. Moustfa Ismael Khaleel & Ahmed Younis Jabbar & Maha Kalai & Rima Aloulou & Kamel Helali, 2024. "An Applied Study of the Symmetric and Asymmetric Impact of Oil Prices and International Financial Markets on Economic Growth in Iraq," International Journal of Energy Economics and Policy, Econjournals, vol. 14(4), pages 66-80, July.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ipt:eapoaf:202505. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Publication Officer (email available below). General contact details of provider: https://edirc.repec.org/data/ipjrces.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.