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On This Valentine’s Day: Know Your Origins

Posted by: Justin Bakule on 1/31/2011

I’ve been following the unfolding political events in Côte d’Ivoire with great interest – a potentially combustible situation in which two men claim to have won the recent presidential election (recent NYT news here). My interest stems from both personal (I used to live in West Africa) and professional (we’ve been working with a client in the West Africa cocoa sector for the past two years) angles.

And, if you’re a chocolate lover make no mistake, this situation should concern you. Why? Because at least a third of the world’s cocoa originates from Côte d’Ivoire, so a serious supply disruption there could translate to disruptions to the candy aisle. Most consumers don’t realize that when they bite into their favorite chocolate bar that they’re biting into a developing world product with cocoa originating from places like Ghana, Nigeria, Cameroon, Indonesia, and the Dominican Republic.

Commodity and consumer products corporations have already been making important shared value investments in the cocoa sector recognizing the business threat to their supply chains. Check out a selection of corporate cocoa programs many of which address specific challenges being faced by smallholders at these links: Kraft / Cadbury, Mars, Nestle, Cargill, and ADM. And for a great framing of this issue, check out a TED talk featuring WWF's Jason Clay here.

But, perhaps, one of the most interesting challenges we see companies grappling with (in cocoa and in other agricultural products) is where to compete and where to collaborate. In other words, where should companies draw the lines between pre-competitive and competitive investments in value chains? For instance, if a company has invested R&D money into the development of new higher productivity cocoa trees, are they willing to provide access to those new trees to other stakeholders in the value chain in the name of quicker progress against the overall goal of improving the cocoa sector? Will they provide this knowledge to competitors? To suppliers? To government institutions? And, can companies effectively identify these opportunities and then work collectively with others in the name of progress even when conditions dictate that they by acting collaboratively they can’t fully own the results of the progress?

What compelling examples have you seen where a company has made a pre-competitive investment in the spirit of driving results that they can't own purely from a competitive standpoint?



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