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Abstract
Studies have shown that small-scale agricultural producers from developing countries do not
generally obtain the potential gains of trade. To investigate what can be done to help them get
better prices, we examine ways to increase their bargaining power. Using data from 1,854
cocoa transactions between traders and producers in Cameroon during the 2005/2006 season,
we show that when the bargaining situation is least favorable to the producers (because prices
are non-negotiable due to interlinked credit and there is information asymmetry) the traders
seize the entire surplus generated by the trade. Farmers who can avoid accepting credit from
the cocoa buyers and can delay sales until after the start of the school year, when the buyers
will not be able to take advantage of the farmers’ financial need, are able to negotiate higher
prices. To improve their bargaining situation, Cameroonian cocoa producers need an efficient
market information system, better access to credit and the development of collective
marketing.