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Ghana will no longer sell cocoa to Switzerland

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Re: Ghana will no longer sell cocoa to Switzerland

#21

Post by msg3 »

m12k wrote: post #15

I'm reading the book The Divide at the moment. It makes the argument that it takes time and the right conditions to build up an industry - infrastructure needs to be built, education and a skilled labor pool with the necessary know-how as well. To begin with, a fledgling industry in a developing country cannot compete with those of already industrialized countries - these are already so effective that they can underc…

The Korean economist Ha-Joon Chang makes similar arguments in his book Bad samaritans. He argues that this model was successfully followed by Korea (Samsung, Hyundai, etc), Japan, and even Henry VII in 15th century England - well worth a read.

Re: Ghana will no longer sell cocoa to Switzerland

#22

Post by zhdc1 »

m12k wrote: post #15

I'm reading the book The Divide at the moment. It makes the argument that it takes time and the right conditions to build up an industry - infrastructure needs to be built, education and a skilled labor pool with the necessary know-how as well. To begin with, a fledgling industry in a developing country cannot compete with those of already industrialized countries - these are already so effective that they can underc…

The Commanding Heights by Yergin and Stanislaw is another good book that makes a similar argument.

Re: Ghana will no longer sell cocoa to Switzerland

#23

Post by ClumsyPilot »

bsanr2 wrote: post #19

This is similar to the situation with Global South coffee exports, wherein actual growers only receive a fraction of the revenue from consumer sales (despite the relatively cheap and easy value-add of roasting or conversion into instant coffee) because of logistical concerns, and because Europeans and American just plain do not buy African roast coffee when it appears on their shelves. If these countries were to deci…

I think people buying fairtrade are under impression they are solving the issue, whereas in reality it doesnt do much

Re: Ghana will no longer sell cocoa to Switzerland

#24

Post by jariel »

m12k wrote: post #15

I'm reading the book The Divide at the moment. It makes the argument that it takes time and the right conditions to build up an industry - infrastructure needs to be built, education and a skilled labor pool with the necessary know-how as well. To begin with, a fledgling industry in a developing country cannot compete with those of already industrialized countries - these are already so effective that they can underc…

So Saudi Arabia, UAE, Canada and Saudi Arabia are 'stuck' selling natural resources?

I think it's probably a much better plant to extract a good deal of wealth from the natural resource and invest it in other areas of higher value creation, even in the same vertical.

There's a good chance that Ghana's policies are needlessly constrained.

More obviously there are 100 things Ghana could do to improve living conditions in more obvious areas i.e. corruption etc..

Consider the immediate situation:

Ghana's exporters have just been banned from exporting. They are going to go out of business very soon.

Ghana doesn't have all of the layers of industry necessary to support development and export of products i.e. there are no market buyers at any reasonable price.

Result: collapse of the industry - unless somehow the Government of Ghana can artificially inflate prices and keep them alive for a very long time while domestic partners somehow magically are able to get off their feet.

This plan feels not very well conceived.

I'll bet something is lurking under the surface.

Re: Ghana will no longer sell cocoa to Switzerland

#25

Post by kleiba »

ramraj07 wrote: post #18
kleiba wrote: post #13

I guess they will have to sell the beans to some other state then, from whom Switzerland will then buy it?

If you read the article you would have gotten the answer - they want to make the chocolate themselves. Godspeed Ghana!

I read the article. Want to bet?

Re: Ghana will no longer sell cocoa to Switzerland

#26

Post by vmilner »

staticelf wrote: post #4

Good for them I guess or is it? I don't understand how you cannot have prosparity from selling raw materials? If you think you're not being paid enough, increase the price along with creating your own products. It seems weird to me to not let foreign countries buy your raw materials just because you want to produce more stuff yourself. It's not like I will start buying chocolate made in ghana because they don't want…

>If you think you're not being paid enough, increase the price along with creating your own products.

That seems to be what happened with Mars and Hershey (i.e. a price increase) though put in the terms of not paying farmers enough and trade war. It's unclear to me whether Mars and Hershey are now getting less cocoa than they did because cocoa is being diverted to domestic production, or the same amount and paying more.

Re: Ghana will no longer sell cocoa to Switzerland

#27

Post by oblio »

m12k wrote: post #15

I'm reading the book The Divide at the moment. It makes the argument that it takes time and the right conditions to build up an industry - infrastructure needs to be built, education and a skilled labor pool with the necessary know-how as well. To begin with, a fledgling industry in a developing country cannot compete with those of already industrialized countries - these are already so effective that they can underc…

> So the book argues that when developing countries are pressured into free trade agreements

This should have been obvious since the Opium Wars and the Opening of Japan (see Commodore Matthew Perry).

All developed countries are pro free trade for markets where they are strong and fiercely protectionist where they are not (or they consider those markets strategic priorities).

I'm from Romania. Romania joined the EU in 2007, so we had to liberalize everything. It has generally been good for us (higher wages, economic growth, overall development), but I know all the German, French, Belgian supermarket chains.

Do you know why I know them? Because there are 0 (zero!) local supermarket chains left. They've all been bought by foreign companies.

Similar story for banks, car companies, whatever.

During the 2008 economic crisis Erste, Austrian banking group, repatriated all the local profits (from BCR, former major Romanian bank) to Austria so that the local banks would not be impacted. Similar story for OMV, Austrian oil and gas group (from Petrom, former major Romanian oil and gas company).

It's a mixed bag, really. You need some foreign investment to kickstart things, but if you don't start blocking stuff off, you'll never go over the middle income barrier, at best. At worst you practically become someone else's colony, or in the olden days, you actually were their colony (and what happened in Bengal in 1941 and Ireland in the 1800s comes to mind).

Re: Ghana will no longer sell cocoa to Switzerland

#28

Post by jariel »

ClumsyPilot wrote: post #20
m12k wrote: post #15

I'm reading the book The Divide at the moment. It makes the argument that it takes time and the right conditions to build up an industry - infrastructure needs to be built, education and a skilled labor pool with the necessary know-how as well. To begin with, a fledgling industry in a developing country cannot compete with those of already industrialized countries - these are already so effective that they can underc…

>"we should allow developing countries" Not to pick on you, but I often hear this frasing in the 'first world' and surely you dont 'allow' or 'disallow' internal policies to an sovereign nation? It sounds like a Freudianslip or something, the reality is that its easy to bully or bribe officials in developing nations.

WTO has rules, as do nations with agreements in place.

'Allow' implies some degree of forgiveness or allowance of entity on the other side of the table.

In this case, Ghana may probably face trade sanction/scrutiny for their protectionism. It will have to play out in terms of other agreements.

Re: Ghana will no longer sell cocoa to Switzerland

#29

Post by msg3 »

jariel wrote: post #24
m12k wrote: post #15

I'm reading the book The Divide at the moment. It makes the argument that it takes time and the right conditions to build up an industry - infrastructure needs to be built, education and a skilled labor pool with the necessary know-how as well. To begin with, a fledgling industry in a developing country cannot compete with those of already industrialized countries - these are already so effective that they can underc…

So Saudi Arabia, UAE, Canada and Saudi Arabia are 'stuck' selling natural resources? I think it's probably a much better plant to extract a good deal of wealth from the natural resource and invest it in other areas of higher value creation, even in the same vertical. There's a good chance that Ghana's policies are needlessly constrained. More obviously there are 100 things Ghana could do to improve living conditions…

By itself, it's probably not a good idea.

If the government supports the development of a chocolate production industry, including support for cocoa exporters, then it has every chance of success.

Re: Ghana will no longer sell cocoa to Switzerland

#30

Post by jariel »

bsanr2 wrote: post #19

This is similar to the situation with Global South coffee exports, wherein actual growers only receive a fraction of the revenue from consumer sales (despite the relatively cheap and easy value-add of roasting or conversion into instant coffee) because of logistical concerns, and because Europeans and American just plain do not buy African roast coffee when it appears on their shelves. If these countries were to deci…

Coffee is a commodity. Marketers will re-brand their roasts pretty quickly and convince us all that 'it's better'.

Coco is special in that production is limited.

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