Improving Agricultural Market Performance:
Creation and Development of Market Institutions
45
and exporters’ activities, so that, “Exporters are now free to purchase direct from farmers. The
system of débloquage – the need to have Government approval before making a sale in the
export market – has also been scrapped.”89
“The main advantage to farmers of the free market system is that they tend to receive a higher
proportion of the prevailing international market price. The margin taken by intermediaries
and exporters is relatively small as they are in competition with each other. Generally, farmers
in countries with free market systems have been getting, typically, anything from 80% to 85%
of the FOB price for their cocoa, while those working under a caisse or board system have
usually received less (and sometimes far less) than 50%.”90
Although liberalization enabled farmers to capture a larger share of export proceeds from their
crop, it also increased their vulnerability when prices declined. With the abolition of CAISTAB,
the cocoa trade “reverted to a spot market, which led to increased volatility.”91
Abolition of CAISTAB had other adverse consequences, which included:
 A decline in quality of product delivered to exporters, since the authorities did not
provide adequate time and support for other mechanisms or entities (either a state or
a private quality control and certification agency, such as an exporters’ association) to
emerge to replace the quality control function previously exercised by CAISTAB;
 Potential exposure of buyers to greater risk of contract non-performance absent the
performance guarantees previously provided by CAISTAB;
 Greater risk of exploitation of farmers by traders, especially in areas where the
quantities of cocoa produced are insufficient to support more than one
intermediary…“Farmers may…be enticed by intermediaries to take generous advances
as credit against future crop deliveries, and thus become indebted to them.”92
 Research by Wilcox and Abbott (2004) indicates an increase in market power
exercised by multinational exporters following liberalization. “It appears that the
Government continues to extract rents from its large world market share, but
following liberalization those rents are shared with multinational exporters. The
markups, [which] include export taxes, range from 30 to 36%... similar to actual export
taxes charged by the Ivory Coast Government prior to structural reforms…[Data]
suggest the Government still sees and seeks to exploit market power, but that it is now
shared with the multinationals.” 93
If true, these findings would indicate that large companies are the main beneficiaries of
liberalization and that neither farmers nor Government have benefited to any great extent. In
the event, Côte d’Ivoire’s experiment with liberalization was short-lived: just 12 years after it
89 INTRACEN (2001), Cocoa: A Guide to Trade Practices, pp. 27-28, Geneva: International Trade Center.
90 Ibid
91 Arvanitis, Y. (2014), “Building commodity trade infrastructure in West Africa: bringing “price” back to its source,”
available a
Accessed
July 2017].
92 INTRACEN (2001), Cocoa: A Guide to Trade Practices, pp. 27-28, Geneva: International Trade Center.
93 Wilcox, M. & Abbott, P. (2004), “Market Power and Structural Adjustment: The Case of West African Cocoa Market
Liberalization,” Selected Paper prepared for presentation at the American Agricultural Economics Association Annual
Meeting, Denver, Colorado, August 1-4, 2004, available at
[Accessed July 2017].