Course:CONS200/2020/Socio-Economic Impacts of Cacao Production in West Africa
West Africa, a region comprised of countries including Côte d'Ivoire, Cameroon, Ghana, and Nigeria, dominates in exports of cacao globally. Since the introduction of the crop from periods of colonialism, the market for the production of chocolate has expanded exponentially, leading to a higher demand for cacao from the region. Being mainly smallholder farms in which family labour is able to be utilized, the cacao industry has taken large steps from its origins, dominating global trade. Economic, social, and environmental factors accompanying this phenomenon will be evaluated through this page, showing the impacts an industry may have upon a region. The positive effects upon the livelihoods of communities will be assessed, as well as systematic struggles that have become established through the domination of the market. As the composition of both the land and the ways in which operation in these nations are affected by cacao, the dominance of the industry will be exhibited, showing the foundation around cacao in which society operates.
- 1 History
- 2 Economic Impacts
- 3 Social Impacts
- 4 Environmental Impacts
- 5 Conclusion
- 6 References
Domestication and Early Cultivation
The domestication of cacao started 8,000 years ago along the banks of major upper tributaries of the Amazon River (today Bolivia, Peru, Ecuador, and Colombia).Ripe cacao pods were consumed by Native Amazonians as fruit.Cultivation of cacao started in Mexico 4,000 years ago under two management systems: smallholder cultivation and larger plantations.Indigenous smallholders planted cacao with other crops under a diverse shade canopy.These two models of cacao production remain in practice today.
With the arrival of the first cacao tree to West Africa being presumed to be through the Portuguese within the early 19th century, the cacao industries development within the region comes alongside a history of colonization. Prior to this, the crop itself has a fascinating history. It had been cultivated for a great amount of time, having its origins in the South American tropics. As the territories of West Africa were under different colonial regimes, the cacao within these varying jurisdictions seems to have arrived at various times, being multiple strains of the crop. Interestingly enough, the cultivation within the Golden Coast, under British authority, developed from a single introduction leading to an increase in uniformity within the region. By the later half of the nineteenth century, cacao production within West Africa had been to merge towards its current trajectory of success and scale. The quality of the cacao cultivated is dependant upon the style of growth that is used, with plant growth in the shade generally being a higher quality product. Despite this, growth within full sunlight exposure also occurs, yielding a different variation of the same product.
Today, nations that comprise of West Africa account for vast quantities of cacao, being a leader in production on a global scale. The investment of many large corporations has led to an overwhelming amount of growth within the region, affecting both social and economic spheres that have been established within the nations.
With cacao most likely originating through the Portuguese bringing it to their formal colony within West Africa, its domain spread quickly reaching other established colonies in a short period of time. Cacao rose in popularity at an alarming rate due to its high profitability on various scales of management, allowing for smallholders, large plantations, and indigenous community members to join means of production. With large government incentivization to grow cacao being placed upon West Africa in the late nineteenth century, the relative ease of planting this crop made it popular amongst the masses.
Cacao trees grow ideally in partially-covered understories of tropical lowland forests below 600 metres, taking roughly six or seven years before trees begin to bear fruiting bodies containing the beans. The plants may also grow in full sunlight exposure, as varying methods of cultivation are used in various regions. Having the unique characteristics of shade though, small-hold farmers were placed at an advantage. Food crops were planted alongside cacao saplings in order to provide the required conditions that the cacao required to thrive. This allowed smallholder families to be able to grow their own food while cultivating cacao, increasing profitability due to the dual function of the land. Weed suppression as well as a boost in biodiversity became useful in this management regime, cutting out external costs upon those owning the land. Due to this occurrence, small-holder farms and indigenously managed lands were able to outcompete large plantations due to the lack of external economic costs that came alongside the management of the land prior to profits being extractable. Cacao cultivation is very tedious, and smallholder regimes benefitted due to dual function of the land as well as a lack of labour costs. This led to an increase in community involvement throughout West Africa, with large corporations opting not to invest within the industry due to high costs associated with labour. The introduction of cacao began a form of livelihood locals could benefit immensely from, having a European demand to fulfil due to their colonial status.
Being able to avoid a hefty initial start-up cost to production, agriculture entrepreneurs flocked to locations in which they could produce cacao for export to colonial powers. With growth in the transportation sector occurring parallel to the cacao boom of West Africa, the movement of market commodities was able to utilize railroads constructed to serve the mining industry closing limitations on growth. Through these occurrences, the Golden Coast obtained the title of the largest exporter in the world in 1911, with cacao exports in this British colony utilizing the native population in order to dominate the chocolate market.
Post-Colonial Power Structures
With suffrage through overexploitation being visible in regions with colonial pasts, West Africa is no exception to this occurrence. While colonial powers possessed dominance of the region, ‘rent crops’ became a way of allocating the land to various groups, having long-lasting impacts. This led to those who managed the land to have ownership over it due to the land use taking place. These crops were then distributed to colonial powers, paying ‘rent’ for occupancy. Due to this, widespread deforestation occurred within West Africa, in a race for a 'land grab'. Under this policy, the growth of the cacao industry was able to occur rapidly despite the negative environmental and social consequences that came alongside its success.
While assessing the Ivory Coast, these very dynamics were visible. The region was exploited heavily to maximize benefits from ‘indigenous workers’, feeding profits into the ‘motherland’, enriching mainland France. This was done through mass deforestation of native ecosystems as well as exploiting the soil resources to their full capacity. As benefits of cacao farming have been seen systematically to be more important to that of environmental factors, land-use change has been increasing steadily since its introduction.
As cacao continues to rise in growth of the commodity, systems for processing cacao lack within regions of West Africa. Due to this, the wealth that could be spread within the region of cultivation is shipped off to former colonial powers, who benefit from the raw resource extraction. The lack of processing facilities within West Africa has been an intentional occurrence, becoming embedded within society. Due to this, impoverished conditions have become standardized, with large wealth inequalities occurring in the regions. Locals focus on being able to extract a maximum yield from the land, ignoring means of sustainability and other initiatives as it is how structures have been arranged, creating a cycle of exploitation that is supported through multinational corporations and others with vested economic interests.
Incentivization such as cacao certificates have been created in order to open up a market to a more sustainable product. Being voluntary, these efforts as well as the fair trade market have had an effect on the ways in which cacao is treated within West Africa, but is still only a small majority of the overall production. Certifications are shown to be a distinction of breaking previous colonial power structures through a change in land-management style, but cacao is a market that is still far from being completely sustainable and profitable for those whose labour is most dominant.
Impact on GDP and Importance of the Industry
Cacao plays a central role within West African economies as the largest export commodity. 70% of the world’s cacao is grown and exported from the Ivory Coast, Ghana and Nigeria. The Ivory Coast has become the fastest growing economy in Africa due to its cacao exports. In 2014, the Ivory Coast accumulated $3 billion in profits from cacao. As one of the leading nations in the cacao industry, nearly 6 million people depend on the industry as a source of income. Despite attempts made to diversify the economy, nearly 68% of the Ivory Coast’s labour force is involved in the cacao industry and a combined 1.5 million households across Ghana and the Ivory Coast produce cacao. The cacao sector is especially of vital importance for rural communities as it has been a key driver for alleviating poverty. As a “cash crop”, cacao products make up 40% of the Ivory Coast's overall exported goods value. Beyond its significance as a crop, cacao has also improved political stability in the Ivory Coast and created a growing middle class. Ghana is the second-largest producer of cacao in West Africa and is largely dependent on its single commodity export.
Smallholder Cacao Farming
Cacao is both a significant determinant of GDP, as well as a vital source of income for smallholder farmers. Cacao is primarily grown through smallholder farmers who account for 70% of total global production. The cacao is sold at farm gate costs to local or multinational exporters who ship the raw goods to foreign processors. Many West African cacao processing facilities are foreignly owned by American or European corporations. Due to the long value production chain and the dominant multinational corporations, the income of smallholder farmers is diminished. Efforts to shorten the market chain are in effect through local governments to ensure that local farmers are granted more power in the market. Government reform of the cacao sector in Ghana has provided farmers the ability to retain their market power within the cacao industry and avoid price volatility by implementing policies to maintain production and exports at a regulated price.
Global Market and Exports
Almost every dimension of international cacao value chains has changed in the last two decades.Exports, market power and price-setting have been majorly determined by the private sector since the 1990s in main producing countries like Ivory Coast, Ghana, and Cameroon.While the governance of production and quality aspects, input credit and supply, extension services and market infrastructure has been state-controlled in main West African producing countries; those governments have lost their ability to manage the international cacao market and control their domestic markets gradually since the late 1990s.
Accompanied by the breakdown of national institutions, low yielding cacao harvests, and pressure from international financial institutions for economic structural adjustment, a market-based corporate governance and price negotiation system has developed in many producing countries.Foreign corporations began to increase their investments, integration, and position in the chain.Traders and grinders Barry Callebaut, Cargill, Olam, Ecom, Sulden, Touton, CEMOI, Cocoanect, and Blommer account for 60%-80% of cacao processing worldwide while the six largest chocolate manufacturers (Mondelēz International, Nestlé, Mars, Hershey's, Ferrero, Lindt und Sprüngli) transform 40% of chocolate products globally. However, this liberalized system and market exposed farmers to global price fluctuations and led to reforms in Ghana and Ivory Coast in 1999 and 2012 privatizing buying and setting minimum export prices.
The production process of cacao involves a long value chain. As a result, payments made to farmers only represent a small portion of the overall profit. Cacao is exported in its raw form which is then processed overseas where it gains a significantly greater value as it progresses through the global value chain. In 2013, 86% of West Africa’s raw cacao was exported to the European Union. European manufacturers obtain the majority of the earned shares from cacao once it is branded. Multinational corporations hold significant power over the global market. Nearly all branded chocolate bars found in supermarkets are processed and branded by established by corporations outside of West Africa. This added value to cacao forms the basis for the volatility of the cacao industry in West Africa and the structural imbalances which are reinforced through governments and global corporations. Millions of cacao farmers across West Africa bear the costs as they earn merely 6% of the value of the final product.
As an effort to alleviate vulnerable farming communities and promote sustainable development, many governments and organizations are involved in fair trade partnerships. Through the integration of local farmers into a sustainable economic platform, fair trade combats the marginalization of smallholder farmers within conventional trading systems. Nine out of 10 cacao farmers in Ghana and the Ivory Coast are Fairtrade certified. The establishment of a fair trade certification grants local farmers more economic viability, a fixed price for their cacao exports, and supports farmers’ long-term development. It also works to ensure that the chocolate is organic and ethically produced. Implementing a fixed price for cacao removes the risk of price fluctuations by enforcing a stable market value. Through improved trading practices, local cacao producers can use their stable incomes to reinvest into their farm for improved quality and farming practices. Fairtrade partnerships grant farmers equal representation in the global market and work toward bridging social and economic gaps within the cacao sector.
The majority of West African Cacao farming is from smallholder farms, which has social impacts on communities, families, and the dynamics within. The cacao production in West Africa is primarily on smallholder, farms in rural areas, usually as the primary source of income for the family.  The whole family participates in production and farm tasks as cacao pods ripen at different times and so require constant work and monitoring.  This has effects on the trajectory of children and women's lives and the level of their availability to be involved in other beneficial activities such as education. As the first link on a global supply chain, smallholder farmers in the region are vulnerable due to the local dependence on cacao production for livelihood.  For example, in Ghana evidence exists of cacao farmers being abused by cacao purchasing clerks in the weighing of cacao beans and in their payment plans.
Cacao as the 'Poor Man's Crop'
The smallholder cacao production in West Africa has impacts on inequality between countries and communities, as well as within families. The chocolate industry is a multi-billion dollar industry where major corporations profit the most, while smallholder farms take on the most risk and share less in the profit. In the global value chain, the reality of profit being more heavily enjoyed in the global North is a grim reality for smallholder farmers in the global south. As large corporations make staggering profits, it is estimated that cacao growers today receive approximately 6.6% of value of a tonne of cacao sold.  Furthermore, smallholder farmers are highly vulnerable and susceptible to disproportionate market value of their products. Cacao farmers receive only a small portion of the world price for cacao beans for a myriad of reasons including local trading structures, taxes, quality of beans, and debt accruement, as seen in the Ivory Coast through the last ten years, farmers only earned between 40-50% of the world market price.
Farmers face inequality all throughout the supply chain, as they often lack access to market information, inputs and technology, and finance information.  Additionally, farmers' incomes are extremely vulnerable to volatile price fluctuations which may stem from loss in supply due to disease, climate variability, pests, extreme weather or political turmoil.  As a consequence, smallholder family farms are vulnerable to economic insecurity, impoverishment, and even food insecurity. Low or insecure incomes lead to negative social and environmental consequences. Farmers may have to stop investing in their farms and sustainable technologies, use less sustainable and diversified practices, may not be able to provide proper working conditions to their workers, and exacerbate the use of child labour. 
The use of children in cacao production is another social inequality found in this sector. However, addressing child labour in West Africa is particularly complex. Between 5 and 14 years old, almost one in three children in Africa are economically active, compared to one in five in Asia.  While developed countries may address child labour through the creation of legislation, this solution is difficult to implement in a region such as West Africa. As most of the production is done by peasant farmers, it is hard to regulate labour spread out in families and further made difficult because of the tradition of handing down knowledge to future generations. A study conducted by Tulane University found that in Ghana alone, 997,375 children aged 5-17 were involved in child labour in the 2008/2009 growing season.  Of these children, 95% of them working in the cacao sector, which account for 43.9% of the total amount of child labour, were involved in what would be considered excessive child labour.
In Sub-sharan Africa, child labour is critically exploitative because of certain socio-economic and political circumstances, given frequent natural disasters, armed conflict, famine and hunger.  Child labour is an expression of poverty and insecurity faced by cacao farmers. When families are at risk, their children must contribute by participating in labour for survival, taking time away from their education. Child labour then also becomes a driver in the cycle of poverty as these vulnerable families cannot internalize the later benefits of their children receiving an education.  The social impacts of child labour are extremely harmful. Children exploited for labour usually work in hazardous conditions, for little if any pay, for long hours with a lack of physical and social security. As well, these children are deprived of their childhood experience, and working usually takes them away from their education, which is essential in future development and potential opportunities.
Women in Cacao Production
Women make up a large share of labourers in Africa, and yet they are generally left out of land ownership, access to credit and farm inputs, and support to access markets. This inequality is harmful to women, but also to society as a whole as it makes families less secure and undermines potential economic growth. Women in the region face further inequality as their contributions to running household work through the gendered division of labour are not taken into account with the same weight as paid work.  At the same time, they are also making significant contributions to agricultural work, on top of household work.  However, one the biggest obstacle to women's involvement is their lack of access to capital.  In the region, the World Bank reports that 48% of men have access to banking, while only 37% of women do. This obstacle, combined with illiteracy, limited land ownership and restricted mobility are all factors that are keeping women from accessing the market and taking control of their labour. The UNDP estimates that the economic cost of the failure to integrate women into the economy in sub-saharan African countries is $95 billion in lost productivity every year. 
While all children are vulnerable in child labour production, girls are especially at risk of a lack of access to education and healthcare as they take on more of the hidden labour in a household.  Closing inequality gaps between men and women can be extremely beneficial for future generations as when women gain more control over life and economic decisions, the outcome for the family as a whole in health, education, and economic security improve.
Requiring deforestation in order to create cacao farms, native forest biodiversity is lost as a result of cacao productions initial startup. The operation though, when underway, has the potential to provide biodiversity benefits under certain growing conditions in the shade when being compared to other land-use alternatives. Biodiversity here is not to the previous extent of the native ecosystem, but when comparing different cacao cultivation methods, those with growth occurring in shaded regions are generally composed of higher biodiversity rates. In addition, this biodiversity is far greater than other potential diversity through different land use regimes that may be implemented within the area.
This is done through the accompaniment of agroforestry. Within this system, various combinations of other plant species are grown in combination with cacao, with certain vegetations attracting biodiversity to the region. It has been previously observed that bird species will increase in richness, utilizing the canopies of the native trees that are left as a result of this process. These species use the grounds for nesting sites, attracting others with their present within the ecosystem. Though this is selective biodiversity, it still enriches the region beyond the scope of an alternative residency.
Food crops are another viable option that may be planted alongside cacao. This is not a natural increase in biodiversity, but it does provide benefits to the area through a diversity of crops being planted within the region through a dynamic cacao growing management system. This leads to increased soil fertility dependent upon the crop, as well as cross fertilization and other effects which can help maximize a yield. With this array of vegetation, the ecosystem is able to expand in productivity, managing itself in a more efficient way through the presence of diversity; this leads to an overall healthier area, and a more successful cacao operation.
With any emerging agricultural industry, land is required to be cleared in order to accommodate for the new crops that will be planted in this region. Between 2003 and 2015, deforestation in West Africa’s Nawa region was visible, with 70% of the total forested land in this region being converted into farmland by 2015. Due to this, degradation of the environment is taking place, leading to decreased viability of the area within the future. This links in to many social and economic issues the region will eventually have to face due to environmental impacts. Despite evident factors of overexploitation within this region, this is the largest cacao production area in the world, which continues practices of growing in size regardless of the implications. This tragedy of forest sustainability can be traced to state bureaucracies’ claims to land ownership, and divergent political interests between groups involved. It is a systemic issue that has deep roots within the industry, leading back to the emergence of production. A loss of regulating and supporting ecosystem services has been seen as a result, impacting other forms of the ecosystem through the vast interconnectivity regions possess.
Following cacaos trend of expansion, deforestation exponentially increased within the region over an expedited period of time, creating space for the expanding cacao market. Forest cover reduced immensely, but as these crops thrive within shaded regions, some vegetation was occasionally left behind to facilitate the needs of cacao. Dense forests were lost as a result, with little area of this kind being visible anymore within regions of cacao growth. Deforestation occurred on a widespread scale throughout this region, showing themes of 'boom and bust production'. In accordance to this, prices increase between planting yields due to nutrient depletion within a region, historically placing local families in positions of poverty. Deforestation has become a rampant issue since the crops introduction, leading to an array of issues on social, economic and political scales within affected regions. It continues to be an issue prominent in the growing cacao market today, with the environment suffering at the cost of industry.
Crop Intensification and Agroforestry
Agroforestry plays an important role in cacao production. Cacao production in multi-strata agroforestry systems supports farmers' livelihoods at local and global scales.  Approximately 70% of cacao is cultivated with various levels of shade globally. The doubled cacao production around the world through the extension on forest pioneer fronts leading to the disappearance of 14-15 million ha of tropical forests (around 2 million in Cote d'Ivoire, 1.5 million in Ghana and over 1 million ha in Indonesia) in the last five decades.  The cacao industry promotes cacao cultivation intensification in order to secure supply for global cacao demand which is growing 1% annually.Cacao crop intensification has caused a reduction in both shade levels and species richness historically.This consequence has negative impacts on the livelihoods of rural cacao communities, the conservation of natural resources and the provision of ecosystem services.Cacao farmers collect timber, fruits, and other goods from share trees to sustain their livelihoods in the face of shocks such as fluctuation of cacao prices and pests outbreak.A botanically diverse and ecologically complex shade canopy also plays a positive and crucial role in the conservation of biodiversity, carbon sequestration, and the provision of other ecosystem services.
The cacao industry often advocates farmers adopting intensive, full sun cacao production assuming that this method requires less land to achieve the same cacao production based on little evidence.However, there is a need for a comprehensive assessment of the tree cover transition from shade to the full sun due to the multifunctional role of shade trees for farmers' livelihoods and the conservation of natural resources.Shade trees play the multifunctional role of enhancing biodiversity, carbon sequestration, soil fertility, drought resistance, and weed and pest control in cacao agroforestry systems. Cacao extension services often only promote a few species of timber producing trees for growing with cacao neglecting the wider role of diverse shade trees species for farmers' livelihoods and environment. Many farmers in West Africa and Latin America want to have more trees on their cacao farm to sustain their cacao production, diversify their incomes, improve their livelihood and adapt to climate change. One major reason for keeping shade trees is the reduction of the risk of price volatility.
Climate Change Impacts
Due to the geographic location of the of the cacao plantations in West Africa, a significant portion are prone to experience forest-savannah transitions due to the onset of climate change. The Northwest cacao belt in Ghana is an important region for agricultural production and is likely to become unsuitable agricultural land due to climate change. Similarly, the land used to produce a quarter of the annual production of cacao in the Ivory Coast is likely to be unsuitable by 2050.
The biggest threat climate change poses on cacao farming and production is drastic temperature increase. In addition to high temperatures debilitating the photosynthetic rates of cacao trees, essential water supplies are also jeopardized. Cacao is highly sensitive to droughts and is easily susceptible to endure water stress as conditions become more dry and warm. Decreased rates of precipitation due to climate change will exceed the range that cacao trees can tolerate. Recent experiments testing the impact of onset climate conditions on cacao trees has shown the correlation between temperature increase and the significant reduction of plant growth.
In an era of accelerated global climate change, the need for investments in adaptations to combat the potential risks associated with climate change is essential. The potential costs climate change places on cacao production in West Africa are likely to have long-lasting negative impacts such as a large decline in production rates and a spike in unemployment in already highly impoverished communities. Lack of systemic adjustments to cacao production systems across all of West Africa’s cacao sector is estimated to produce a net profit loss between 270-660 million USD per year. Government policy efforts would be an effective means of informing farmers of the measures required to manage with the risks associated with the environmental changes. Using incremental adaptation, farmers can gradually adapt their cacao farming practices to smoothly implement the essential structural changes. Changes would include alternative means for crops or water management strategies. Tackling the issue of climate change in a timely manner will ensure that risks associated with increased temperatures and less precipitation can be minimized and more manageable.
Due to the high demand from global markets, cacao is an important “cash crop” for West Africa, and it plays a significant role in the formation of social and economic development . As a crop introduced through colonization, cacao has grown to be a commodity upon which certain nations, such as Ghana, have become primarily dependent. Without it, the significant advancements being observed across West Africa such as the rapid economic growth in the Ivory Coast, would not be possible. The cacao industry has positively impacted the livelihoods of millions of rural families and has helped alleviate impoverished communities. The economic viability of the cacao industry and the dominance of foreign corporations has also led to the emergence of various social and economic inequalities. Farmers often have to contend with poor incomes which leads to crop loss due to outdated farming techniques and insufficient income to invest in proper farming equipment. Child labour is an example of a consequence of the economic imbalances within the cacao industry and displays the negative impacts of low smallholder farmer incomes. Women have also been disadvantaged within the cacao industry through the gendered division of labour.
Cacao plantations present both environmental benefits and drawbacks. The ecological benefits of cacao trees include supporting surrounding biodiversity and an increase in species richness. In order to support the high demands of the global market, a steep rise in deforestation and significant degradation of the environment. In addition, the fragile nature of cacao trees has made them vulnerable to the onset changes of climate change. Rising temperatures and drought-like conditions are likely to introduce new challenges for cacao farmers. There is still much work to do to resolve the issues affecting both cacao farming communities and the environment. Efforts from local governments can help to restructure the global value chain and ensure that farmers are provided equal representation in the cacao sector. Through the integration of initiatives such as fair trade systems, key cacao sourcing nations are able to overcome the economic disparities of the global market. Government implementation and commitment toward policies that prioritize long-term amenable goals will ensure the wellbeing of cacao farmers and overall improved sustainability of the cacao sector.
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