The Economics of Chocolate

by Mara P Squicciarini (Editor), Johan Swinnen (Editor)

This book, written by global experts, provides a comprehensive and topical analysis on the economics of chocolate. While the main approach is economic analysis, there are important contributions from other disciplines, including psychology, history, government, nutrition, and geography. The chapters are organized around several themes, including the history of cocoa and chocolate -- from cocoa drinks in the Maya empire to the growing sales of Belgian chocolates in China; how governments have used cocoa and chocolate as a source of tax revenue and have regulated chocolate (and defined it by law) to protect consumers' health from fraud and industries from competition; how the poor cocoa producers in developing countries are linked through trade and multinational companies with rich consumers in industrialized countries; and how the rise of consumption in emerging markets (China, India, and Africa) is causing a major boom in global demand and prices, and a potential shortage of the
world's chocolate.

Genres: Food

512 pages, Hardcover

First published March 1, 2016

Reviews

[Jerrod · Rating 2 out of 5]

Most visceral reaction: I might scream if I see the phrase "demand outstrips supply" one more time in a book ostensibly written by people with knowledge of economics (even if some contributors are not economists). This is doubly annoying since page 333 shows that crop production (quantity supplied) and grindings (quantity demanded) have been equal since 1945 (when data started being collected on grindings).

Most valuable information from the book: the reason why Swiss chocolate taste so much smoother and more chocolatey than American chocolate (especially Hershey's) is that the Swiss use the conching process (developed in 1879), in which heavy granite rollers break down sugar and cocoa particles. By law the Swiss require 72 hours of conching.

This book a mixed bag of analyses looking at the economic world of chocolate. Most of the papers are a bit too shallow (even on narrow subjects) to interest most readers. The historical chapters had a much higher value added relative to the economics chapters. We see the usual issues of producers lobbying the government for protection and businesses coming up with creative ways to meet consumer preferences (e.g. selling chocolate in smaller quantities to make it more affordable, which occurred in both early 1900s Belgium and modern day India). It also seems that some further reading of the IO literature, especially some of Tirole's work would have help illuminate some of the issues with concentration and price.

More accurate research on health and chocolate: https://www.vox.com/science-and-healt...

Likes, dislikes, and minutiae:
- apparently cocoa was a medium of exchange (there is some evidence of counterfeit cocoa beans) in pre-Colombian American
- trends: more concentration in chocolate production, grinding and cocoa processing moving more to cocoa growing countries
- it wasn't until the 20th century that chocolate was consumed mostly as a solid. It's previous form was liquid and often times Quakers promoted it support of the temperance movement
- "A Belgian male laborer needed to work 60 hours to buy a half kilo bar of chocolate in 1893, but only just over an hour in 1913." (p.58)
- at least one chocolatier got his start by selling medicines covered in chocolate to make them more palatable
- cocoa beans from different sources are blended together due to inconsistent quality
- health nudges chapter references Wansink several times (Andrew Gelman not a fan) (Wansink also had to recently retract a paper due to some improprieties with the data and analysis). This chapter is all that is wrong with the nudge paradigm
- WTP chapter incredibly unconvincing. should have presented the heterogeneity of consumers WTP (rather than the average). Also if consumers are willing to pay for fair trade then you should be seeing that in the receipts data.
- Interesting look at how global chocolatiers are increasing their involvement in cocoa farming but most of it is surface level with descriptions going no deeper than spending money on educating farmers (yes, but how? what are they doing to try to increase productivity? what kind of education?)
- there are enough instances of misinterpreting (or over-interpreting) graphs that make me think this was more of a vanity project than a serious scholarly work. Example: page 435 (in the chapter on chocolate in India) the authors say that figure 21.12 suggests that sales through supermarkets (rather than the traditional kirana stores) are likely to increase. All the figure tells the reader is what share of sales comes from supermarkets and what share of sales comes from traditional stores and there was 0 (I repeat, ZERO) change in these shares (about a 90/10 split for supermarkets/traditional) between 2005 and 2013. This is not to say that sales in supermarkets won't increase, but the graph doesn't give any insight into that question (and given the overall anti-Walmart sentiment in Indian regulations, it's not a certainty that there will be stellar growth in the supermarket sector).
- In "Concentration and Price Transmission", the authors say, "Paradoxically, these reforms [guaranteed minimum farm-gate prices, stricter control of bean quality, among other things] aiming at protecting farmers from unfair practices tend to strengthen the position of the large and well-established traders and grinders." This is "paradoxical" only if you are unfamiliar with the public choice literature.
- in the same chapter, the authors say, "Since Cote d'Ivoire is the largest cocoa supplier and second-largest cocoa grinder, the cocoa market remains vulnerable to political instability and to marketing and pricing policy in the country." They support this with a graph of world cocoa prices and dates for political events, but there are a few episodes that suggest the opposite (like the 2 year export ban during which world cocoa prices fell).

[Mills College Library]

338.17374 E1978 2016