Analysis of a failed primary commodity cartel:The Grenada Cooperative Nutmeg Association (GCNA) and the Association of Indonesian Nutmeg Exporters (ASPIN) joint marketing agreement:

Abstract

This thesis is a study of a failed attempt at the formation of a primary commodity cartel. In 1986, the Grenada Cooperative Nutmeg Association (GCNA) entered into a Joint Marketing Agreement with the Association of Indonesian Nutmeg Exporters (ASPIN) to create a cartel by agreeing to control the supply of nutmeg and mace onto the international market to increase and stabilise the prices of the commodities. At the time of the Agreement , Indonesia was the world‘s largest supplier of nutmegs and mace (75 - 80 per cent of supply), and Grenada the second the second largest (10 - 15 per cent of supply). Catz International B V, a Dutch spice trader played a key role in the formation of the Agreement and was also instrumental in the formation of ASPIN, as an Indonesian association of nutmeg exporters and secured sole buyer status for nutmeg and mace exported by ASPIN. The Agreement appeared to be briefly effective raising prices but cracks appeared in the Agreement within two years and it formally ended in mid-1990. This thesis investigates: (a) the motivations and decision making of Grenadian stakeholders in forming the Agreement; (b) the role of external stakeholders in the formation, performance and demise of the Agreement, and (c) the ongoing efforts of the GCNA to continue the Agreement when it was failing. GCNA‘s archival records, statistical data, and discussions with key Grenadian stakeholders and some international traders were the sources of data. Stakeholder analysis and the literature on cartels provided the theoretical grounding and context. The qualitative case-study approach using triangulation to establish what happened and Langley‘s sense-making strategies have been used to construct the narrative. The key results of this study are: (a) the fundamental economic conditions necessary for the formation and sustenance of the Agreement as a cartel were absent; (b) the organisational arrangements for the sustenance of the Agreement on the Indonesian side were deficient, and (c) GCNA was active in forming the Agreement and persisted in attempts to revive the Agreement because of deficiencies in its information and knowledge about the Indonesian and market situation arising out of over-reliance on a single source. The study contributes to knowledge on decision making in commodity cooperatives in small economies and has wider lessons for management decision making in developing countries