Cocoa marketing chain in developing countries: How do formal-informal linkages ensure its sustainability in Cameroon?

Lionel Lenou Nkouedjo,Syndhia Mathe,Dorothy Engwali Fon,Maria Geitzenauer,Armel Awah Manga

doi:10.1016/j.geoforum.2020.09.005

Abstract

Although liberalization of the cocoa sector has increased internal competition within the marketing chain it has also led to the emergence of informal market actors within the chain. Therefore, the aim of this paper is to analyse how the cocoa marketing chain operates by measuring and comparing the marketing margins of the formal and informal actors. Qualitative data were used to establish the structure of the marketing chain and quantitative data to estimate the marketing margins. A total sampling size of 76 cocoa market actors was obtained by using a multi-stage sampling technique: 15 for qualitative data and 61 for quantitative data. Descriptive analysis was used to map the marketing chain and economic analysis to compute the costs and margins for both informal and formal market intermediaries from the Centre and South-West regions in Cameroon. The results indicated three market intermediaries (one informal and two formal) and four marketing channels by which cocoa moves from the farmers to the exporters. The calculation of marketing costs indicated that informal actors incurred the highest costs in both regions. The results regarding the marketing margins were twofold: informal actors obtain low net marketing margins when they do not use illicit strategies, but high net marketing margins when illicit strategies are used. Given the significant role of informal actors, we suggest that their actions should be integrated in a suitable manner into those of formal actors to contribute to a better performance of the marketing chain and to the sustainability of the cocoa sector.

Highlights

Marketing plays a critical role in meeting the goals of food security, poverty alleviation, and sustainable agriculture, among smallholder farmers in developing countries (Makhura, 2001)
There are no data yet available to indicate the magnitude of the diverse cocoa marketing channels in Cameroon, based on the different relations that exist among the market actors it could be noted that four variant marketing channels exist for cocoa beans: Marketing channel 1: Farmers – Coaxer – Licensed Buying Agents (LBAs) – Exporters; Marketing channel 2: Farmers – LBAs – Exporters; Marketing channel 3: Farmers – Cooperatives – LBAs – Exporters; and Marketing channel 4: Farmers – Cooperatives – Exporters
Coaxers have a negative Net Marketing Margin (NMM) in both regions due to the high marketing costs that the informal market actors support in the marketing chain

Summary

Introduction

Marketing plays a critical role in meeting the goals of food security, poverty alleviation, and sustainable agriculture, among smallholder farmers in developing countries (Makhura, 2001). As in many other agricultural markets, the cocoa market is characterized by a multitude of marketing agents (Ogunleye and Oladeji, 2007) who all play important roles within the marketing chain (Gilbert, 2008). Since the liberalization of the cocoa market in African countries, some smallholder actors in the marketing chain still find it difficult to participate fully (Makhura, 2001). Numerous studies have shown that the smallholder re mains poorly linked to the agricultural market (Gabre-Madhin, 2009; Kamdem, 2016; Key et al, 2000) even though the liberalization of economies in developing countries was aimed at increasing the parti cipation of economic agents in market activities (Castaño, 2001; Malan et al, 2015; Masuka, 2013)

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