Wednesday, October 3, 2007

Finance/Economy/Fair Trade Outline

Factory Budget

Construction Budget

- Machinery

- Materials (local) – per square foot, per beam etc.

- Energy sources - $20,000 included in comp. budget for solar panels. Geothermal price: $7500-$12000 for average US residence, usually 2-10 year payback

- Construction labor

Operating Budget

- Transportation – look at costs for fuel, trucks, etc.

- Labor

- Inputs (sugar, etc.)

- Energy

- Gas

- Food

- Cleaning Supplies

Technology Hubs

Initial Budget

- 3 computers

- Printing

- Storage

- Cameras

Operating Budget

- Energy

o Man-powered?

- Ink

- Paper

o Paper/ink from rainforest fibers/materials

Cooperative Economy

- Average income (members and non-members)

Regional Economy (Baeza, Papallacta, Napo province)

- Average income

- Unemployment

- Job profile/distribution

- Literacy, health care, food

- Property value/housing cost

- Comparison to national averages

National Economy

- Major exports/imports

- Per capita income


World Factbook info

Chocolate Economy

- Price history

- Average prices

- Labor practices

- Crop attributes (+ climate relationship)

Fair Trade

- General history/description

- Typical income increase (%)

- History/current use in Ecuador

- Enforcement/certification (Transfair, Oxfam)


1) Cocoa trees

Cocoa trees take a few years (~5) to grow to maturity; until then, they don't produce much. Then, their yield goes up sharply from years 5-20. At that point, some trees will succumb to disease, and trees will age, and so they begin a long, slow decline until year ~50? They grow best in shade, so they are often grown with other crops like coffee (and this is probably why they grow well in the rainforest)

2) Market cycles

Due to the 5 year "ramp up time" once you plant cocoa, what often happens is that prices will be quite high, and so then everyone wants to have cocoa to sell, so people plant... and then after a few years, there is a bunch more cocoa on the market and prices go down. So, people stop planting, and trees age / diseases strike, and since production cannot be quickly increased, growers don't want to do new planting unless it's really necessary. So, they wait until prices are quite high, (repeat) So, prices often move in cycles on the order of 10 years. Also, in West Africa (at least when these books were written) there were "market boards" that effectively had a monopoly on the country's production and set the price, so their actions obviously affected prices.

3) World Regions

Most cocoa is grown in Latin America, West Africa, and Indonesia / Phillipenes. The cocoa from Indonesia / Phillipenes has only been substantial in the last 20 years, possibly because this is when hybrid varieties started to really take off, varieties that yield more cocoa, are resistant to some of the diseases etc. There is "bulk cocoa" and "fine cocoa," and a lot of the bulk cocoa is grown in West Africa and Indonesia / Phillipenes. Lost of the "fine cocoa" is grown in Latin America (Kallari is an example, I believe) because they use pure varieties and haven't taken on the more "plantation / large -scale" mentality of some other regions. There are many downsides; lower productivity, diseases, etc. But of course, the upside is that it's organic and tastes better.

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