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Commidity Chains Cause the Growth and Retraction of Cocaine Worldwide

Updated on December 30, 2014

Overview: Commodity Chains & The Cocaine Industry

Commodity chains played a significant role in the spread of cocaine across the globe. The 1800’s were dedicated to exploiting and researching the coca plant and processed cocaine, which quickly became helpful in local anesthetics and a cure all for most medical ailments. The Peruvians, Europeans, and Americans all grasped the research and the data regarding coca and cocaine’s medical abilities. Although, cocaine did not become a global commodity until the scarcity of the coca plant grew due to the increasing medical uses for it multiplied (Gootenburg, 2008). The first two commodity chains that led to the rise of cocaine and its global trade were the German/European –Andean chain and the U.S.-Andean chain as well as smaller contributions from Britain and France. The fall of the cocaine industry was largely due to three commodity chains known as the U.S., Dutch-European, and Japanese pan Asian circuits and the onset of the World Wars.

Cocaine Supply & Demand

According to Gootenburg (2008) commodity cocaine was derived from a shortage crisis. The two largest European producers, Merk and Gehe, of manufactured cocaine halted its production due to the plants shortage, driving prices and demand to skyrocket throughout Britain, France, and Germany. By 1888, European manufacturers used “Peruvian crude cocaine” and “refined it into medicinal grade cocaine,” causing cocaine production to reach 5,000 kilo by 1910 (Gootenburg, 2008, p. 58). Cocaine became Merk’s most profitable drug and stimulated its growth into a world “pharmaceutical giant,” and established a branch in New Jersey (Gootenburg, 2008, p. 58). As the supply and demand for cocaine grew, by 1900 the United States became a prominent consumer of cocaine for medical procedures, ailements and recreational use, but as well as the world’s third leading producer.

Supply & Demand


Growth of Commodity Cocaine

The German and American pharmaceutical companies contributed to the spread of cocaine by creating commodity chains. Each manufacturer competed to meet the global demands of supply, but also exported to each other in an attempt to feed the consumer market. While the manufacturing of cocaine grew, so did the global market for coca infused goods such as tonics, tea, cigarettes, wine and beverages. Various products such as Coca-Cola and Vin Mariani represent prominent commodities that other countries attempted to imitate and mirror to match the rising demand for these marketable goods. According to Mortimer and his survey along with the 1888 Coca Commission from Peru, both hoped that coca would be used as apart of everyday life, similar to the use of tea and coffee. Coca goods became an ever-growing commodity and became a million dollar industry. Coca imports from Peru into the United States reached 400,000 tons and quickly rose to 800,000 tons between 1902-1908. The use of medicinal cocaine or coca goods in and around the global community is largely due to the Peruvian supply of cocaine and its expanded industry (Gootenburg, 2008). Crude cocaine became Peru’s most profitable export with a 600 percent increase from 1890 to 1901.

Downfall of the Cocaine Industry

U.S.-Andean Commodity Chain

After 1910, three emerging commodity chains contributed to the fall of the cocaine industry as well as the trade disruptions from World War I and the U.S. occupation in Japan and its eventual global prohibition of the drug. The U.S.-Andean circuit was known as the most resilient and longest supply chain of cocaine until 1910. From 1910 to 1940, the United States launched a prohibition and numerous anti-cocaine policies. Due to the new imposed U.S. laws on cocaine use, Peru shifted its market to Japan, France, and Germany. With the price of cocaine on the rise, cocaine exports lost extreme value and dropped by 95 percent (Gootenburg, 2008). The United States continued to stamp out the production of cocaine globally as well as regionally for medicinal purposes and in prominent coca products. The United States became the main enforcer of eradicating cocaine throughout the global arena by using the Geneva Conventions within the League of Nations. (Gootenburg, 2008). The United States was able to shut down Peru’s ports to Japan and Germany. The Peruvian government eventually implemented restrictions and policies regarding the use of cocaine.

Dutch-European Commodity Chain

The Dutch European commodity chain greatly influenced the eradication of cocaine production. From 1905 to 1930, the Dutch Java quickly became prominent in the global coca trade, exporting from 800 tons in 1912 to an eventual 1700 tons in 1920, cutting into the world’s coca market. By 1911, the Dutch established 44 plantations that produced coca for a quarter of the global market, which surpassed the cultivation of coca in the Andes region. The onset of World War I created international trade issues and forced the European market to rely on Javan production of coca. The Dutch Java’s success in coca production caused many global markets to bypass the Peruvian supplier and led to a decrease of 95 percent in Peru. By 1920, the Dutch were required to supply the entire global community with its cocaine demand. Furthermore, after World War I, prices of cocaine reached at all time low as well as cocaine profits. The rise of the Java cocaine industry was completely desecrated with Japan’s invasion during World War II. Japan’s invasion coupled with the U.S. occupation resulted in the destruction of the coca plantations and the industry itself.

Japanese Commodity Chain

In the 1930’s, the Japanese commodity chain became one of the largest producers of cocaine in Southeast Asia. During WWI, Japan was able to remain self-sufficient while other countries faced global trade issues. Cocaine production in Japan became a thriving industry and was able to produce 8,000 pounds of cocaine annually (Gootenburg, 2008). Exports throughout Southeast Asia began to plummet due to complaints and smuggling of false cocaine into China’s major cities as well as covert operations and stockpiling of the drug for internal uses. The onset of WWII, forced Japan’s cocaine industry to fall under the “wartime jurisdiction of the Japanese state” for producing non-medical cocaine related products (Gootenburg, 2008).



Commodity chains developed between 1850s to the early 1900’s played a key role in the spread of cocaine across the globe. The scientific research and development behind the coca plant and cocaine, created numerous medical advancements and healing properties for wasting diseases through the use of cocaine. Cocaine became a global commodity when the uses for it extremely multiplied, creating a high European and American demand. During the 1900’s is when the three new commodity chains emerged, the United States, Dutch-European, and Japanese pan Asian circuits, causing cocaine demand to bypass Peru and the eventual downfall of the cocaine industry due to the onset of World War I.


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