The Cocaine Commodity Chain

The cocaine commodity chains play a big role in the history of illicit commodity chains in North America. The origins of the chain begun in the Andes when the drug was found in coca leaves discovered in the 1800’s. In the first paragraph of my essay I’m going to touch on the history of the commodity chain, however my main focus will be on the growth of the chain in North America between 1950 and 2000, the geographical regions, spatial logistics and organization.
Alfred Niemann, an Austrian physician, was the first to chemically extract the cocaine from the coca leaf in 1859. In the mid 1800’s, Andes has begun shipping coca over to Germany for pharmaceutical purposes. The production of cocaine for medicinal purposes went through two phases;

first phase was between 1885 and 1910 when it was “promoted by German pharmaceutical firms, U.S. consumers and authorities, and Peruvian medical and regional elites”(Gootenburg 162). Following 1910 was the second phase which lasted until the 1940’s when the use of cocaine was declining due to plantation rivals, diminishing of medicinal usage and the impact of being labelled a “narcotic”. The popularity grew very rapidly in 1880 spiking an international coca crisis, which was the beginning of crude cocaine from Peru. Crude cocaine shipped much cheaper and the products lasted much longer than the coca leaf, making it Germans preferred product. On to the 1920’s the commodity chain was not only illicit but dormant as well. The commodity chain continued to experience a major drop in 1928 as the coca exports dropped from seven hundred and nine thousand kilograms to three hundred and eighty-five kilograms annually. The market continued to drop drastically until the 1950’s. After the 1950’s jump in cocaine sales, it became a multi-billion-dollar illicit industry.
The exceeding demand for cocaine sparked again in 1950 after Andean cocaine escaped all state regulations by avoiding them through underground niches. In 1970, cocaine began to occupy much of the United States. With easier access to the drug, it became increasingly more established. However, the price of the drug was much higher than others at the time, giving it the name “the champagne drug” and being consumed by elite Hollywood and wealthy people in general. In 1980, the United States government discovered extensive retailer markets in middle America, ghetto crack and Dominican gangs forcing coca frontiers to spread deep into the Huallaga Valley and Bolivia’s Chapare jungles. The chains then shifted by rerouting smuggling in the 80’s to “obey the basic laws of drug suppression and commodity chains” Ten years later, the country was importing approximately one thousand metric tons of cocaine annually; composing its annual revenue fifty to one hundred billion dollars. Starting in mid 1990’s, the illicit coca growth was pushed out of Peru and Bolivia and into Colombia. The commodity chain of cocaine is now beginning to deteriorate due to the fact that the United States begun enforcing laws vigorously . Today, studies suggest that the overall capacity of coca peaked in 2001 and coca is now beginning to emanate again in Peru and Bolivia.
First of all, a commodity chain “account[s] for the sequence of operations leading from the extraction of raw materials to the consumption of final products”.

How the commodity chain works isn’t only on the product, there’s a responsibility needed to be reached by the organization and geographical sense as well. This however, is more difficult for the cocaine commodity chain because of its illicit status. Geographically, the growth of the coca leaf depends on what it needs to grow, therefore the leaf is grown in Peru and Bolivia. The production of the cocaine was from Cuba and Chile then smuggled into the United States for distribution. The way this commodity chain is spaced out makes a lot of sense. Peru and Bolivia, side by side countries on the coast of South America produce the coca to be shipped along the coast to Cuba and Chile to be processed. By having these places on the coast, it puts transaction costs to a minimum saving them money. By different productions being in different places in order for them to work it labels the cocaine commodity chain as a social division of labour. Once the cocaine was in the United States, there were three main groups. The main man, this guy was responsible for bringing it into the country and making the connection to Southern America to receive their shipment. Then it is brought to the wholesalers. The wholesalers are responsible for distributing large amounts of cocaine to their dealers; who then sell in smaller amounts to consumers.
To conclude, I believe the cocaine commodity chain was very impressive. While the drug was illicit and only consumed by a few percent of the population, the revenue was enormous. By managing to be a successful commodity chain, and drug, cocaine is now the second most common illicit drug in the United

States.