International specialisation — practice question

There are fears that chocolate prices could rise sharply over the next few years. This is due to stronger demand for chocolate, especially in emerging countries, alongside supply difficulties in the countries that grow cocoa beans. Cocoa beans, the key ingredient in chocolate, are produced mainly on the west coast of Africa by small farms using labour-intensive methods. In 2012 Côte d’Ivoire (Ivory Coast) accounted for 37% of the world’s output of cocoa beans, with Indonesia next at 13%. Côte d’Ivoire is increasingly recognised for supplying high-quality cocoa beans. Concentrating on the product that best suits its resources has increased output in the country. Gross Domestic Product per head rose to US$1240 in 2013. However, some farmers and farm workers still live on less than US$2 a day. In Indonesia, the earnings of most cocoa farmers and farm workers rose as the country’s average income increased between 2013 and 2014. Their purchasing power was nevertheless reduced by the consumer prices index rising from 108.0 in 2013 to 115.2 in 2014. Although medical care in Indonesia is improving, with more doctors per head, the government is trying to raise education standards. The problems being faced by cocoa bean producers include an ageing labour force, with the industry struggling to attract young farmers and farm workers. The industry also regularly experiences difficulties caused by pests and diseases, including black pod disease. At the same time, people in Asia, particularly China, are eating more chocolate and drinking more chocolate drinks. People in the United States of America and the European Union are also eating more chocolate, although worries about the health effects of eating large quantities of chocolate are beginning to affect demand. For many people, however, chocolate is addictive. Chocolate producers try to exploit this by widening the gap between revenue and costs. Most chocolate producers are based in developed countries and most are public limited companies trying to keep their shareholders happy. These producers use their market power to keep the price they pay for cocoa beans relatively low while the price they charge consumers who buy their chocolate is kept relatively high.