Indonesia's Cocoa Boom: Hands-Off Policy Encourages Smallholder Dynamism

March 1996 Indonesia's cocoa output, produced mainly by smallholders on the island of Sulawesi, increased a phenomenal 26 percent a year (average, compounded) between 1980 and 1994. The government's hands-off policy was an important factor in this rapid expansion of output. This case study of Sulawesi's cocoa market is a counterpoint to investigations of highly regulated markets --- agricultural and otherwise. The Indonesian island's rapid expansion surprised the world cocoa market, especially because it came mostly from smallholders. Akiyama and Nishio examined the smallholders' production and marketing systems and the government policies implemented for smallholders to identify any policy lessons that might be useful for other countries...