Pass-through of cocoa prices along the supply chain : what's left for farmers in Côte D’Ivoire?

Cocoa farmers in Côte d’Ivoire face precarious livelihoods. Low farm-gate prices that are a fraction of the world market price compel land-extensive farming practices that perpetuate a cycle of poverty and environmental degradation. This paper seeks to understand the drivers of the low pass-through of cocoa prices in the world’s largest cocoa-producing country and to identify potential inefficiencies and remedies. The analysis comprehensively covers price formation along all segments of the in-country supply chain. Our approach couples econometric analyses using secondary cocoa price data and primary farm household survey data with qualitative assessments of institutional factors specific to the cocoa value chain in Côte d’Ivoire. Notwithstanding the country’s highly regulated system of setting cocoa prices, we do not find evidence for inefficiencies that would explain persistently low farm-gate prices. Nor do we find that the recently introduced ‘’Living Income Differential’’, a price premium on internationally traded cocoa, has benefited farmers. We conclude by advocating for the international cocoa industry to strengthen its development programmes in cocoa-growing communities, complemented by government provision of infrastructure and other public goods. Such efforts can ultimately serve to increase the opportunity cost of cocoa production, drawing farmers into other employment sectors while improving the resilience and livelihoods of those who remain.