08 July 2008

Cocoa processing in West Africa: addendum

Thank you to readers for commenting on the question of cocoa processing - I stand corrected! In fact, Côte d'Ivoire isn't just the world's largest cocoa producer, but the third-largest processor (only just behind the Netherlands and the USA). Ghana, though much smaller with less than 100,000 tonnes of capacity right now, is catching up - ADM and Cargill have gleaming new factories under construction.

It seems that tax incentives do the trick, along with the comparatively cheap energy and transport out of the coastal ports - great news for anyone working there. I'd be interested to know what the CID folks make of this. Are the tax incentives a good use of resources? Presumably yes, if two conditions are met: (1) cocoa processing has positive externalities that give it a social benefit over and above the direct jobs/profits and (2) the processing wouldn't have happened without the tax incentives. I can see lots of good spillovers from cocoa processing, so this is probably a good deal for the governments concerned.

1 comment:

Sahil said...

The 2 reasons mentioned by you for incentives are very true ... in addition, the way tax money is utilized in these parts of the world, incentives for increasing local manufacturing become even better for the society.