Essays on Cocoa Production Situation in Leading Cocoa Production Countries Case Study

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The paper "Cocoa Production Situation in Leading Cocoa Production Countries" is a good example of a management case study.   This report is dived into two parts. The first part of the report analyses the cocoa production situation in leading cocoa-producing countries, including Cote d’ Ivoire, Indonesia, Dominican Republic, Peru, Mexico, Brazil, Cameroon, Ghana and Nigeria and analysis of macro-environmental factors affecting the industries using PESTEL tool. The second part of the report will analyze the factors causing the looming 15-year chocolate production shortage. Cocoa Production in Cote d’ Ivoire, Indonesia and the Dominican Republic Cote d’ Ivoire is the world’ s leading cocoa-producing country with an annual production capacity of 1.57 million tons as of 2016, which is a decline from the previous year’ s 1.75 million tons.

This means that Cote d’ Ivoire produces 40% of cocoa used in the world. However, poor weather coupled with harmattan conditions has affected the production of cocoa in Cote d’ Ivoire with projections indicating the cocoa production in the country will drop by 80,000 tons in 2017 (Verdin 2016). Indonesia is the world’ s third-largest cocoa-producing country with a production capacity of about 350,000 tons in 2014/2015.

However, this is a sharp decline compared to the previous years’ production of 575,000, 435,000, 500,000 and 575,000 in 2010, 2011, 2012, and 2013 respectively. Indonesia cocoa is growth mainly by small scale farmers with the country’ s cocoa grown on approximately 1.5 million hectares of plantations. Like other parts of the world, declining cocoa production is linked to poor weather (Indonesia-Investments 2017). The Dominican Republic is a major producer of cocoa. The country is known for producing high-grade, fine flavor and organic cocoa and has an annual production capacity of about 70,000 tons.

Cocoa is a huge industry in the Dominican Republic and is a major export earner to this nation. Although cocoa production has been increasing in the country, the latest projections indicate that cocoa production will plummet slightly in 2017 and 2018 due to bad weather patterns (UNDP 2015). PESTEL: Cocoa Production in Cote d’ Ivoire, Indonesia and the Dominican Republic Country Cote d’ Ivoire Indonesia Dominican Republic Political The country is prone to civil war Country highly volatile during elections that tend to be postponed most of the times. High corruption The country launched a new cocoa sector governing body to regulate the industry Land tenure rights a big political issue Cocoa attract 34% tax Enjoys relative political stability as it is being governed by a democratic president High corruption rate Cocoa exports attract 10% tax Modern democracy Enjoys political stability Corruption is an issue Low tax on cocoa exports Economic Weak economic growth and outlook Per capita income has declined by 15% since 1999 High unemployment rates Low cocoa yields at 450 kg/ha (Heritage 2017). Positive economic growth with GDP growth of 4.8% in 2016 GDP per capita of $11,126 The high unemployment rate of 5.8% $15.5 billion FDI Rising middle-income population (Heritage 2017). The second-largest economy in Central America and the Caribbean Upper-middle income developing nation GDP growth of 7% Per capita GDP of $14,984 High unemployment rate at 14.4% (Heritage 2017). Social Social services are lacking with only 28% of cocoa farming villages having a health centre Child labor is high at with 89% of children making the labor force, 9% of which is forced labor High migration Low life expectancy The majority depends on agriculture The majority live in rural areas HIV/Aids an issue Growing literacy rates Minimal incidences of child labor in cocoa farms Average life expectancy (70 years) The majority depends on agriculture The majority live in urban areas The population of 10.8 million people 35% of the population is below 15 years while 5% are 65 years and over The average life expectancy of 73 The majority live in urban areas Technology Low technological development Low technological developments in the cocoa industry Advancing technologically in the cocoa industry Legal High tax rates for cocoa at 34% Relaxed labor laws Low tax rates Tough employment laws to prevent child labor and exploitation Tough labor laws to curb child labor and trafficking in the cocoa industry Laws protecting farmers from exploitation have been enacted Environment The high rate of deforestation is an issue Declining soil facility is also an issue that the government and civil rights groups are trying to control. Deforestation a concern Declining soil facility an issue Deforestation a concern Declining soil facility an issue Cocoa production in Peru and Mexico Peru is an emerging major player in the cocoa industry.

Currently, Peru is the 13th largest cocoa producing country with an annual production capacity of 70,000 tons in 2014, which marked about 5% increase compared to the previous year when production stood at 68,021 tons. This production accounts for about 1.3% of global cocoa production. The country has about 145,000 hectares of cocoa plantations with the majority of cocoa growth by small scale farmers.

However, Peru’ s production is expected to increase with the strong support of the government (Held 2015). Mexico is among the world’ s cocoa-producing countries. However, Mexico’ s cocoa production is dismal compared to nations like Peru. However, cocoa production in Mexico has been declining at a faster rate. In 2003, cocoa production stood at 50,000 tons and by 2005, it had declined to about 36,366 tons, which declined further in 2006 to just about 26,705 tons. In 2007, the trend continued with production declining to 23,878 tons and today, cocoa production in the country is estimated at about 20,000 tons only.

The decline in cocoa production is linked mainly to the outbreak of diseases, especially frosty pod rot disease and ageing trees (Cocoa-Mexico 2016).

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