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The bitter price of sweet chocolate: cocoa market integration amid global shifts

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  • Vina Yunita Ria,
  • Yuli Hariyati,
  • Joni Murti Mulyo Aji,
  • Rena Yunita Rahman
Vina Yunita Ria
University of Jember
Yuli Hariyati
University of Jember
Joni Murti Mulyo Aji
University of Jember
DOI: https://doi.org/10.36253/rea-17159

Published 2026-11-03

Keywords

  • Agricultural marketing,
  • Cocoa,
  • Indonesia,
  • Global geopolitics,
  • Vertical market integration

How to Cite

Ria, V. Y., Hariyati, Y., Aji, J. M. M., & Rahman, R. Y. (2026). The bitter price of sweet chocolate: cocoa market integration amid global shifts. Italian Review of Agricultural Economics. https://doi.org/10.36253/rea-17159

Copyright (c) 2026 Vina Yunita Ria, Yuli Hariyati, Joni Murti Mulyo Aji, Rena Yunita Rahman

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

This study analyses vertical price transmission across the global cocoa, Indonesian export, and Indonesian farm-gate markets using monthly data from January 1994 to December 2024. Econometric diagnostics include Johansen cointegration, the vector error correction model (VECM), Granger causality, and the Chow breakpoint test. Johansen cointegration confirms a stable long-run equilibrium, but normalised estimates indicate a severe margin disparity, with farmers capturing only 48% of price changes, while exporters capture 94%. The VECM estimates reveal severe short-run price stickiness at the farm-gate level despite rapid adjustment behaviour at the export level. Granger causality confirms bidirectional feedback between global and export markets, but a strictly unidirectional flow from the farm-gate to the export level. The Chow breakpoint test confirms the absence of a structural break following the April 2010 progressive export tax policy, proving that domestic market rigidities and oligopsonistic structures were already deeply entrenched. Asymmetric price transmission isolates smallholders as price-takers, hindering United Nations Sustainable Development Goals 1 and 8. Policy interventions must prioritise transparent digital price-tracking systems, farm-gate price-floor mechanisms, and village-level fermentation infrastructure.

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