The Threats That Cocoa Production Faces in Nigeria, Brazil, Peru, and the Dominican Republic - Essay Example

Strategic Management Assessment 1 Name: Tutor: Subject: Date: Cocoa production in the Dominican Republic has been increasing recently and it occupies the 10th positions as the global exporter of the crop. The republic is known for its quality, organic, and Fair-trade-certified cocoa. One of the political factors influencing the production of cocoa is that the Dominican Government works to ensure the production is environmentally sustainable. The economic factor that promotes cocoa is Fair-trade in which the country is leading. The republic is also known for producing two kinds of cocoa; Sanchez, which is a buttery cheap product, and Hispaniola, a better-fermented bean. Indonesia is the world’s third leading producer of cocoa beans. The main environmental factor problem affecting cocoa production in Indonesia is pod borer insect which affects the quality of the crop leading to stagnant growth. Most of the crop also comes from smallholders farms which are considered an efficient method. Ivory Coast is the world leading producer of cocoa beans. Cocoa contributes about two-thirds of the trade revenue received in the country. The crop is mainly exported to Nestle and Cadbury companies. Legal factor facing production of cocoa in Ivory Coast is child laborers. It is reported that the children can work for about 100-hour long per week and the children are subjected to physical abuse. Social factor affecting the production of cocoa is that the child laborers are not educated. Peru was placed in the ninth position in the production of cocoa. The economic factor that has limited the production of cocoa in Peru is competition over agricultural land. The competition comes from coca plant that produces cocaine and has much higher prices than cocoa. Peru is the largest producer of cocaine in the world. Mexico is also as the top producer of cocoa and Hershey and Ferrero invested heavily on the cocoa facilities recently. Cocoa production in Mexico, however, is declining to make the country to import more than she can export. The environmental factor that is associated with the decline is frosty pod rot disease. This problem is being mitigated by planting hybrid plants that are more resistant to the disease and the production is increasing. Brazil is among the world leading producer of cocoa and consumer of chocolate. For the last few years, cocoa production in Brazil has been declining and this makes the country to import more cocoa for her consumptions since the country consumes more than it can export. The Brazilian Government Forecasts that the production of cocoa will decline by about 17.5% for the next 7 years. Despite the drop in the production, Brazil is still the top producer of cocoa in America. Cameroon falls under top five producers of cocoa. Cocoa is the main cash crop in Cameroon growing about 275,000 metric tons in 2013. Although Cameroon is the largest producer of cocoa, it is affected by poor management. This is evident in the aged trees and some are beyond the production age. Planting new trees will correct this economic problem. Nigeria is also on the top of cocoa production table and the production of the crop seems to grow. The main economic factors that contribute to the growth of the crop include rising global prices and demand for cocoa beans. The growth is also attributed to increased availability of agricultural technology applied in the production of the crop. On top of the positive growth of cocoa production in Nigeria, their production is facing some social problems. The main problem is on gender equality on cocoa farms where claims say that women and men who do the same work are not paid equally. Ghana is ranked the second in the production of cocoa and the major contributor of the country’s GDP. Most of the cocoa farmers are smallholders. The biggest economic challenge that cocoa farmers face in Ghana is high operational costs. This cost is related to lack of corporate control since most of the farms are owned and maintained by the farmers. Another problem is that the price of cocoa is low in Ghana and most the farmers are smuggling their cocoa to Ivory Coast where they crop fetches good price about 50 percent more. Cargill is one of the world’s leading sustainability food and agricultural company with a team of more than 100, 000 professionals and found in 70 countries. The group is concerned with risk management of food, nutrition, and agriculture. Cargill help farmers grow more and also to penetrate into more market. Cargill buys agricultural products from the farmers and processes them into food, animal feeds, and fuel. The supplier power of Cargill focuses on solution-oriented suppliers who can supply good products and services. The buying power of the company is based on cross-business collaboration. Cargill is also facing competition from a large number of competitors. In most countries, the government limits competition by issuing regulatory policies but Cargill is not affected by this because the company complies with the policies. Cocoa production is only limited to specific areas mainly those located at 18 degrees north and south of the equator. As an agent of Cargill, farmers should be advised on the strategy to mitigate threatened 15-year cocoa shortage in order to maintain aggressive and competitive poster. Cocoa production sector is being threatened by several factors. These include diseases, unreliable rainfall, poverty, fluctuating prices, and management issues among many other things. One of the diseases that affect the cocoa production is frosty pod rot. This is a fungal disease that affects the pods of growing cocoa leading to damaged beans. The disease is mainly common in South America, particularly Latin America. Reports indicate that the disease can be found in about 11 countries of Tropical America and the fungus has the ability to survive different environmental conditions. For this reason, it is projected that it might enter Brazil. Efforts to mitigate the frosty pod rots of cocoa involve planting resistant varieties. Acquiring improved resistant genotypes is environmentally friendly and also a long-term solution for controlling the disease. Another threat of cocoa production is unreliable rainfall. The production of cocoa is highly dependent on regularity and amount of rainfall. Unreliable rainfall is due to climate change that is experienced all over the world (Hutchins, 2015). Rainfall has a direct effect on a number of cocoa yields. Unreliable rainfall has resulted in reduced amount of cocoa. For example, production of cocoa declined from 5.8% in 2009 to 8.9% in 2012 in African leading cocoa producers as reported by World Cocoa Foundation (WCF) (Ploetz, 2016). This decline is due to the drought that is experienced from time to time. Brazil is also affected by unreliable rainfall which makes the volume of cocoa production in Brazil unreliable also. Practicing agroforestry methods such as mixed farming will help increase rainfall reliability. This means that cocoa trees are planted together with food crops, timber trees, and fodder crops help to improve water-holding capacity of the soil due to the mixed types of roots that hold soil particles. Practicing smart agriculture is also another way of increasing the production of cocoa. This includes planting trees that are more resistant to climate change. Embracing agricultural technology to dry cocoa, such as the use of solar panels is another method for mitigating unreliable rainfall (Hutchins, 2015). Poverty is another threat that faces cocoa production. The farmers who grow cocoa are in poverty despite the rising prices of the crop. Poverty is prevalent in Ghana and other parts of West Africa (McKinley, 2016). One of the major factors that make cocoa farmers remain in poverty is that they don’t have control over decision making. In Ghana, cocoa business is done through the government and some of the money is kept for running some programs that are designed to help farmers and maintaining infrastructure. Another factor is that most of the farms are small thus makes it difficult to produce adequate cocoa to sustain the lives of the farmers. To mitigate poverty, farmers need to come together and form cooperatives or other agricultural groups. This will enable them to easily access the market and purchase farm inputs at cheaper prices. Cocoa trees are poorly managed and they have grown old thus producing less cocoa that cannot break poverty cycles. Applying good agricultural practices such as replacing the older trees with new and productive ones will help increase production of cocoa. Engagement chocolate companies such as Cadbury and Nestle is likely to improve the lives of the people (Boateng, 2014). Another threat that is faced by cocoa production is cocoa pod borer. Cocoa pod borer is a larva that feeds inside cocoa pods causing the seeds to stick together making the quality of the beans to be poor. The pest is found most areas of South East Asia. Managing pod borer is difficult but it can be mitigated through a combination of approaches that are environmentally friendly. These include practicing good crop hygiene, early harvesting of the pod, and pest trapping. Relying on insecticides can harm the environment and therefore farmers should minimize the use (Niogret, 2016). References Barrientos, S., 2016. Beyond Fair Trade. The Economics of Chocolate, p.213. Boateng, K., 2014. Improving Cocoa Production Through Lean: A Case Study of the Ghanaian Cocoa Industry. Hutchins, A., Tamargo, A., Bailey, Y. and Kim, Y., 2015. Assessment of Climate Change Impacts on Cocoa Production and Approaches to Adaptation and Mitigation: A Contextual View of Ghana and Costa Rica. International Development Studies, pg, 16. McKinley, J., Nalley, L.L., Asare, R.A., Dixon, B.L., Popp, J.S. and D’Haese, M., 2016. Managing risk in cocoa production: assessing the potential of climate-smart crop insurance in Ghana. JOURNAL OF INTERNATIONAL AGRICULTURAL TRADE AND DEVELOPMENT, 10(1), pp.53-79. Niogret, J., Alborn, H., Ingram, H., Kendra, P., Lambert, S., & Epsky, N. (2016, September). Ecology of the cocoa pod borer, Conopomorpha cramerella (Lepidoptera: Gracillariidae), a major pest for the cocoa industry. In Meeting Abstract. Ploetz, R., 2016. The Impact of Diseases on Cacao Production: A Global Overview. In Cacao Diseases (pp. 33-59). Springer International Publishing. . Read More