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Potential for Upgrading in Financialised Agri-food Chains: The Case of Ghanaian Cocoa

Author

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  • Sophie van Huellen

    (SOAS University of London)

  • Fuad Mohammed Abubakar

    (Cocoa Marketing Company GH Ltd)

Abstract

We revisit functional upgrading opportunities for developing and emerging market companies in the context of highly financialised food systems. We argue that the assessment of upgrading potential within the global value chain literature lacks consideration of constraints posed by financialisation, not only of the sector within which upgrading takes place but also by the global financial architecture more broadly. For the Ghanaian cocoa–chocolate sector, we show that financialisation acts as limiting factor to upgrading, with contradicting tendencies. First, financialisation of lead firms, eager to outsource non-core activities, has promoted cocoa processing in Ghana, but the resulting consolidation of power hinders further functional upgrading. Second, Ghana’s dependency on cocoa for foreign exchange earnings necessitates upgrading into higher value-added segments, while also undermining feasible upgrading strategies that build on domestic or regional markets first. These contradicting tendencies constitute a middle value-added trap, which is difficult but not impossible to overcome.

Suggested Citation

  • Sophie van Huellen & Fuad Mohammed Abubakar, 2021. "Potential for Upgrading in Financialised Agri-food Chains: The Case of Ghanaian Cocoa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 33(2), pages 227-252, April.
    • Handle: RePEc:pal:eurjdr:v:33:y:2021:i:2:d:10.1057_s41287-020-00351-3
    DOI: 10.1057/s41287-020-00351-3
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    2. Tröster, Bernhard & Gunter, Ulrich, 2022. "Trading for speculators: The role of physical actors in the financialization of coffee, cocoa and cotton value chains," Working Papers 68, Austrian Foundation for Development Research (ÖFSE).

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