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Belize in the Cocoa-Chocolate Global Value Chain

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Belize in the Cocoa-Chocolate Global Value Chain Belize in the Cocoa-Chocolate Global Value Chain July 2018 Prepared by Danny Hamrick and Karina Fernandez-Stark Duke Global Value Chains Center, Duke University Global Value Chains Center This research was prepared by the Duke University Global Value Chains Center on behalf of the Organization of American States (OAS). This study is part of the establishment of Small Business Development Centers in the Caribbean. The report is based on both primary and secondary information sources. In addition to interviews with firms operating in the sector and supporting institutions, the report draws on secondary research and information sources. The project report is available at www.gvcc.duke.edu. Acknowledgements The Duke University Global Value Chains Center would like to thank all of the interviewees, who gave generously of their time and expertise, as well as Renee Penco of the Organization of American States (OAS) for her extensive support. The Duke University Global Value Chain Center undertakes client-sponsored research that addresses economic and social development issues for governments, foundations and international organizations. We do this principally by utilizing the global value chain (GVC) framework, created by Founding Director Gary Gereffi, and supplemented by other analytical tools. As a university- based research center, we address clients’ real-world questions with transparency and rigor. www.gvcc.duke.edu. Duke Global Value Chain Center, Duke University © July 2018 i Belize in the Cocoa-Chocolate Global Value Chain Acronyms ........................................................................................................................................................... iv Executive Summary ............................................................................................................................................ v 1 Introduction ............................................................................................................................................... 1 2 The Global Cocoa-Chocolate Industry .................................................................................................. 2 2.1 The Cocoa-Chocolate Global Value Chain .................................................................................. 6 2.2 Global Trade in the Cocoa-Chocolate Global Value Chain ...................................................... 9 2.2.1 Global Supply ................................................................................................................................ 9 2.2.2 Global Demand ...........................................................................................................................12 2.3 Governance and Lead Firms .........................................................................................................15 2.3.1 Standards and Institutions .........................................................................................................17 3 Belize in the Cocoa-Chocolate Global Value Chain ..........................................................................20 3.1 Belize’s Current Participation in the Cocoa-Chocolate Global Value Chain ........................20 3.2 Governance and Industry Organization ......................................................................................23 3.3 Industry Evolution in Belize’s Cocoa-Chocolate Global Value Chain ....................................26 3.4 Advantages and Constraints..........................................................................................................28 3.4.1 Advantages ..................................................................................................................................29 3.4.2 Constraints ..................................................................................................................................29 4 Lessons for Belize’s Upgrading in Cocoa-Chocolate from Global Experiences ............................30 4.1 Case Studies ....................................................................................................................................32 4.1.1 Ecuador— Increasing Value by Product and Functional Upgrading....................................32 4.1.2 Dominican Republic—Upgrading via Industry Coordination ..............................................36 4.2 Lesson Learned for Belize .............................................................................................................39 5 Recommended Upgrading Trajectories for Belize .............................................................................40 6 References ................................................................................................................................................42 Tables Table 1. Characteristics of Cocoa Beans by Type ........................................................................................ 2 Table 2. Fine Flavor Cocoa (FFC) Bean Exports by volume, 2015...........................................................11 Table 3. Key Industry Stakeholders in the Cocoa-Chocolate GVC .........................................................26 Table 4. Belize's Cocoa-Chocolate Industry Evolution, 1970s-Present ...................................................28 Table 5. SWOT of Belize’s Cocoa-Chocolate Industry .............................................................................28 Table 6. Selected Upgrading Trajectories in the Cocoa-Chocolate GVC ..............................................31 Table 7. Major Policies in Ecuador's Cocoa Industry .................................................................................35 Boxes Box 1. Fine or Flavor Cocoa ............................................................................................................................ 3 Box 2. Mondelez Cocoa Life Program to Boost Productivity ..................................................................... 5 Box 3. Specialty Chocolate and Artisanal Chocolatiers ............................................................................... 9 Box 4. Key Takeaways.....................................................................................................................................19 Box 5. Toledo Cacao Growers Association ................................................................................................24 Figures Figure 1. Cocoa-Chocolate Global Value Chain ........................................................................................... 6 Figure 2. Cocoa Chocolate Value Chain Input-Output Traders ..............................................................10 Figure 3. FFC Export Unit Value for 100% FFC Exporting Nations, 2008-2015 ....................................12 Figure 4. Top Ten Cocoa Bean Importers, by Value (US$ billion), 2005-2015 ......................................13 ii Figure 5. Top FFC Importers, by Value (US$ million), 2006-2015 ...........................................................14 Figure 6. Leading Chocolate Exporters, by Value (US$ million), 2005-2015 ..........................................15 Figure 7. Leading Chocolate Importers by Value (US$ million), 2005-2015...........................................15 Figure 8. Price and Production differences by cocoa bean type ...............................................................18 Figure 9. Belize Cocoa Exports by Value (US$), 2006-2016 .....................................................................21 Figure 10. Belize Cocoa Bean Export Destinations, 2016 .........................................................................21 Figure 11. Belize's Current Participation in the Cocoa-Chocolate GVC ................................................22 Figure 12. Belize Cocoa Production and Planting Area, 2010-2016.........................................................23 Figure 13. Ecuadorian Cocoa Bean Exports, 2005-2015............................................................................33 Figure 14. Dominican Republic Exports by GVC Segment (US$, million) 2006-2015 ..........................37 iii Acronyms ANECACO National Association of Cocoa Exporters BCC Belize Cacao Consortium BELTRAIDE Belize Trade and Investment Development Service CCN-51 Coleccioń Castro Naranjal CONACADO National Confederation of Dominican Cocoa Producers, Inc. EU European Union FFC Fine Flavor Cocoa FINACO Association of Producing Countries of Fine Aroma Cocoa FLO Fairtrade Labelling Organizations GAP Good Agricultural Practices GI Geographic Indication GVC Global Value Chain ICCO International Cocoa Organization INEN National Institution of Standards ISO International Organization for Standardization JAS Japanese Agricultural Standards MAGAP Ministry of Agriculture, Livestock, Aquaculture and Fisheries MMC Maya Mountain Cacao NGO Non-Government Organization NOP National Organic Program PDO Protected Denomination of Origin PGI Protected Geographical Indication RA Rainforest Alliance SMEs Small and Medium-Sized Enterprises TCGA Toledo Cacao Growers Association TSG Traditional Specialty Guarantees US United States iv Executive Summary This report uses the Global Value Chain (GVC) framework to examine Belize’s position in the global cocoa-chocolate industry and identify opportunities for local business to improve their position in the sector. While Belize is a relatively small player in terms of overall production volume, it has a distinguished historical tie to cocoa and is developing a reputation for premier quality. Specifically,
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