World Cocoa Industry - Case Study Example

World Cocoa Industry (Students Name) (Institution) (Date) World Cocoa Industry Ivory Coast Ivory Coast ranks as the leading single producer and supplier of cocoa. The country producers about 30% of the total cocoa used in the whole world. This percentage exceeds what any other single producer contributes to the world market. This is approximately a total of crop of 1,448,992 tones. The growing and production of cocoa is the greatest income earner for Ivory Coast contributing to more than two-thirds of the total income received by the country. Therefore, cocoa remains as the backbone of the nation and a great income earner of Ivory Coast up to date. Ivory Coast is the world’s leading cocoa grower and supplier (Appiah 2004). PESTEL: The political space of Ivory Coast contributes significantly to the growing of the cash crop with significant government investment witnessed in this sector. Economically, Ivory Coast relies heavily on this cash crop with many people growing cocoa for purposes of sustenance. The social culture of the citizens of this country is deeply rooted into farming with many people relying on the need of cash crop for survival. This can be seen in the manner in which various citizens accept and rely on the cash crop for survival (Fold 2001). Growth in the technological sector has seen easy harvesting, drying and processing of cocoa on Ivory Coast, therefore improving its efficiency. Indonesia Growth of cocoa in Indonesia picked up in the late 1980s. Before this period, there was no significant emphasis on the need for growth of cocoa. Since 1990, cocoa has remained as one of the greatest income earner in the country. The number of tones produced by Indonesia keeps on growing on annual basis. For example, the figures shot to 777,500 tons in the year 2013 and increased by 2% in 2016. However, the country has been grappling with the challenge of the crop borer insect which destroys the cocoa crops resulting into major losses. This challenge has impacted negatively to cocoa crops produced by Indonesia in the last few years. Indonesia is third largest cocoa grower in the world (Fold 2001). PESTEL: The Indonesian government came up with policies and framework for the cocoa farmers to have an easy access to foreign markets. This has been enabled by the robust government policy for easy and free export of cocoa. The economic environment has however been less supportive with about 90% of cocoa growers being the small scale farmers with little financial capacity. Currently, Indonesia stands out as one of the top companies with great processing units courtesy of the improvement in technology. The legal framework operationalized in Indonesia is supported by the political goodwill to advance easy trade of cocoa across the country’s borders (Gallaway et al. 2003). Dominican Republic Dominican Republic stands out as a world’s leading ethical producers of chocolate and other cocoa products. The country is known for the two major types of cocoa which includes the Sanchez and the Hispaniola varieties. One fundamental feature of Dominican Republic is its leading position in “Fair-Trade” production of cocoa. This implies the observance of better practices and policies of production of cocoa. Progressive trends are seen in regards to the patterns of cocoa production in the country. For example, Dominican Republic produced a total of 68,021 tones in 2013. PESTEL: The Government has instituted political framework which has promoted environment-friendly production of cocoa in Dominican Republic. These policies have promoted fair trade in the country. The economic status of Dominican Republic reveals significant empowerment of the nationals to engage in cocoa production. The availability of the two major varieties of cocoa has promoted investment opportunity and chances for the growth and production of cocoa. The use of modern technology has ensured that the production of cocoa in Dominican Republic is of high standards and free from environment pollution. The country has employed the use of environmental-friendly technological procedures that have advanced the quality of processing (Blowfield 2003). Peru and Mexico The growth of cocoa in Peru has continued to suffer setback due to the competition for the agricultural land. There are many farmers within Peru and the available land for cultivation is still a contentious issue among the citizens. The available land for growing cocoa crop is limited thereby limiting the potentials form this crop. Besides, the growth of coca is seen as one of the leading cash crop earners and this has seen intense rise in competition for cocoa growth. The world’s largest producer of coca has had about 60,000 hectare of land under cocoa cultivation and just 40,000 hectare under cocoa production. The country producers about 71,175 tones on an annual basis (Appiah 2004). PESTEL: The Peruvian political environment invests a lot in the production of cash crop. Significant government grants and allocations have been cited as the greatest ingredients for the growth of coffee. The society is influenced by their recognition of the need to advance in the cash growth of cash crop. This explains why coca and coca are dominant as the agricultural activities advanced by the country. Cocoa farming in Peru has remained as a successful issue to the robust technological features integrated into the processing and packaging stages. This has influenced the quality of coffee produced in the country and made the coffee highly competitive in the market (Gallaway et al. 2003). Mexico is one of the countries which have continued to experience enormous challenges in regards to its cocoa farming. Since 2000, the country has experienced a 50% decline in the production and processing of the coffee. The decline is highly attributed to the interference by Frosty crop rot which is one of the diseases affecting the cocoa crops. The significant decline in the production of cocoa in the country has seen the introduction of hybrid crops aimed at combating the prevalence of the cocoa disease and remain resistance. Last years, the country managed a production of cocoa beans to a tune of 82,000 metric tons which is seen as an improvement compared to the previous years (Grundy 2006). PESTEL: The Mexican political space is largely said to be contributing the decline of cocoa production due to its little investment and efforts towards curbing the challenges experienced in cocoa production. This has contributed to great loss among the cocoa growers. The great investment into the production of cocoa and further processing by Hershey and Ferrero has immensely improved the technological environment (Blowfield 2003). The production and final products of the cocoa have greatly improved despite the decline in the amount of cocoa beans produced. The legal framework within the country has equally remained supportive of exportation and integration of expertise from other countries. The positive legal framework has seen various investors seeking to support the growth and further cocoa production in Mexico despite the declining trends. Brazil and Cameroon cocoa Brazil is the largest producer of coca in Americas registering about in 256,186 metric tons of cocoa beans in 2013. However, this is a small percentage as compared to the world’s production standard of major producers such as Ivory Coast. Brazil is one of the countries with much domestic demand for coffee than it can export. The rate of demand of this cash crop within the country exceeds what it producer forcing the country to engage in importation so as to supplement the growing demand. PESTEL: The growth of coffee in Brazil has been supported by strong political and legal framework instituted in the country. Growers have much confidence despite the little capacity produced. The economic status of the country has however had little significance on the production of cocoa since many other people have divested into other economic opportunities. Cameroon, on the other hand, has been on a positive trajectory regarding the production and processing coca. The country located in West Africa has witnessed immense production from both small scale and large scale farmers across the country. For example, the average total quantity of cocoa beans produced in 2013 was 275,000 metric tons in 2013. PESTEL: The government of Cameroon has placed several incentives such as grants to the cocoa farmers which has supported their farming activities. The allocation of disease-management resources has equally improved the production of coffee despite the threat of the ageing coca plant population. Ghana and Nigeria cocoa Nigeria is one of the countries that are dependent on the production of cocoa. The country foresees a growth in its production with positive projections made on a daily basis. The Nigerian cocoa farmers continue to enjoy massive income from their exportation of surplus production making the country one of the largest producers. PESTEL: The introduction of cutting-age agricultural; technology in Nigeria has seen immense improvements in the production of cocoa. This has further been enhanced by the positive economic climate created by the growth of the Nigerian economy in the last five years promoting the growth of the crop. Ghana depends on cocoa as the major income earner for the country. A lot of emphasis has been made by the small scale framers in Ghana who rely entirely on the growth of this cash crop for their livelihood. PESTEL: There is lack of political goodwill for production of cocoa with many small scale farmers smuggling their cocoa to Ivory Coast to benefit from the high sales. The technology for processing is equally low in Ghana making the neighboring Ivory Coast dominate in such a production Cargill Inc. Synopsis Cargill Inc., is a private corporation which is based in Minnesota in the United States. The firm was founded in 1865 in Delaware and currently stands out as the largest privately owned corporation in regards to its revenue in the entire America. The firm engages sin businesses such as trading in gain crops such as cocoa and coffee (Gallaway et al. 2003). Market share Cargill Inc commands about 25% of the entire America’s grain export market. Besides, it controls about 22% of America’s meat market by engaging in importation from countries such as Argentina. The revenue levels of the company as declared in 2016 are US$107.1 billion (2016). Five Forces Analysis Intensity of rivalry: the market in which Cargill operates, being the food market, is one of the highly competitive markets. Many firms both in the United States and beyond have exported their products to the United States causing intense competition for Cargill. Threat of substitution: this pillar looks at the availability of similar products as those offered by the business. The food market has a lot of substitutes. The higher number of both domestic and foreign substitutes in the US reduces profitability of the company (Fold 2002). Threat of new competitors: the food industry within which Cargill operates is intense with new entrants seeking to benefit from the intense opportunities in the market. This has been seen from both domestic and foreign entrants (Grundy 2006). Bargain power of suppliers: The suppliers have the ability to benefit from their bargaining power on prices for commodities they offer. This is done to benefit them from advantages such as price considerations. Bargaining power of customers: customers within the food market exert a lot of pressure so s to bargain for low price considerations. This has remained as one of the issues battled by Cargill which also seek so maximize its sales (Rice 2010). Recommended strategy This paper recommends that Cargill enhances its divestiture into other food market besides grain so as to be cushioned against the lasting coca shortage. Going into investment into other food markets helps in bolstering the profitability potentials and makes the firm more competitive in the market. References Appiah, M. R. (2004). Impact of cocoa research innovations on poverty alleviation in Ghana. Ghana Academy of Arts and Sciences. Blowfield, M. (2003). Ethical supply chains in the cocoa, coffee and tea industries. Greener Management International, (43), 15. Fold, N. (2001). Restructuring of the European chocolate industry and its impact on cocoa production in West Africa. Journal of Economic Geography, 1(4), 405-420. Fold, N. (2002). Lead Firms and Competition in ‘Bi‐polar’Commodity Chains: Grinders and Branders in the Global Cocoa‐chocolate Industry. Journal of Agrarian Change, 2(2), 228-247. Gallaway, M. P., McDaniel, C. A., & Rivera, S. A. (2003). Short-run and long-run industry-level estimates of US Armington elasticities. The North American Journal of Economics and Finance, 14(1), 49-68. Grundy, T. (2006). Rethinking and reinventing Michael Porter's five forces model. Strategic Change, 15(5), 213-229. Rice, J. F. (2010). Adaptation of Porter's five forces model to risk management. DEFENSE ACQUISITION UNIV FT BELVOIR VA. Schrage, E. J., & Ewing, A. P. (2005). The cocoa industry and child labour. 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