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    Coffee Value Chain: A Blend of Upgrading

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    Aik Djogja
    This document provides an overview of the global coffee value chain. It discusses basic facts about coffee production and prices. It then maps out the key stages and actors in the coffee value chain from inputs and growing to processing, trading, roasting, and retail. The document raises questions about how the chain structure impacts upgrading opportunities for producers. It discusses the potential for economic, social, and environmental upgrading through various strategies like product differentiation, certification programs, and improved labor and environmental standards. The proposed methodology involves comparative case studies of upgrading experiences in Brazil, Costa Rica, Ethiopia and Vietnam through interviews and analysis of secondary data sources.

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    © All Rights Reserved
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    Coffee Value Chain: A Blend of Upgrading

    Uploaded by

    Aik Djogja
    57 views25 pages
    This document provides an overview of the global coffee value chain. It discusses basic facts about coffee production and prices. It then maps out the key stages and actors in the coffee value chain from inputs and growing to processing, trading, roasting, and retail. The document raises questions about how the chain structure impacts upgrading opportunities for producers. It discusses the potential for economic, social, and environmental upgrading through various strategies like product differentiation, certification programs, and improved labor and environmental standards. The proposed methodology involves comparative case studies of upgrading experiences in Brazil, Costa Rica, Ethiopia and Vietnam through interviews and analysis of secondary data sources.

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    coffeevcpptdukeviuworkshop2009-110908101743-phpapp02

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    This document provides an overview of the global coffee value chain. It discusses basic facts about coffee production and prices. It then maps out the key stages and actors in the coffee value chain from inputs and growing to processing, trading, roasting, and retail. The document raises questions about how the chain structure impacts upgrading opportunities for producers. It discusses the potential for economic, social, and environmental upgrading through various strategies like product differentiation, certification programs, and improved labor and environmental standards. The proposed methodology involves comparative case studies of upgrading experiences in Brazil, Costa Rica, Ethiopia and Vietnam through interviews and analysis of secondary data sources.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    57 views25 pages

    Coffee Value Chain: A Blend of Upgrading

    Uploaded by

    Aik Djogja
    This document provides an overview of the global coffee value chain. It discusses basic facts about coffee production and prices. It then maps out the key stages and actors in the coffee value chain from inputs and growing to processing, trading, roasting, and retail. The document raises questions about how the chain structure impacts upgrading opportunities for producers. It discusses the potential for economic, social, and environmental upgrading through various strategies like product differentiation, certification programs, and improved labor and environmental standards. The proposed methodology involves comparative case studies of upgrading experiences in Brazil, Costa Rica, Ethiopia and Vietnam through interviews and analysis of secondary data sources.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 25

    Coffee

    Value
    Chain: a
    blend of
    upgrading

    Outline
    Basic facts about coffee
    Coffee GVC
    Whos capturing the gain?
    Economic, environmental, social
    upgrading: what does it mean for
    coffee VC and local development?
    Deliverables (presentation, word
    file, working files)

    Basic Facts About Coffee


    Until 1990, the world trade of coffee was
    subject to a quota system controled by
    ICO;
    After the quota system was abolished,
    the prices have been going up and down
    reflecting supply and demand trends;
    Being a primary commodity, coffee prices
    are inherently unstable. One source of
    price instability is the vulnerability of
    coffee plants to unfavorable weather
    conditions and climate changes;

    Basic Facts About Coffee


    (2)
    Despite falling prices in the 1990s,
    the world production and exports of
    coffee increased;
    Vietan emerged as a big exporter in
    the 1990s, when the country
    planted over a million acres
    between 1990 and 2000 of coffee
    and flooded the market with cheap
    Robusta beans;

    Price Trend 1980-2009

    Source: International Coffee Organization

    Coffee World Exports

    1980
    Brazil

    1985

    1990

    15.626.545 19.156.605 16.971.237

    2000

    2007

    18.016.261 28.116.006

    Costa Rica

    1.182.521

    2.040.422

    2.265.644

    1.964.980

    1.363.850

    Ethiopia

    1.257.739

    1.133.277

    1.074.101

    1.981.856

    2.604.008

    Uganda

    1.823.592

    2.537.582

    2.352.680

    2.513.272

    2.693.187

    156.667

    1.145.234

    1.234.021

    2.133.116

    Vietnam
    Germany
    TOTAL

    11.618.376 17.936.219

    3.291.689 4.824.659,00 10.696.972

    60.247.690 71.360.000 80.561.589

    89.562.101 96.367.286

    Source: International Coffee Organization

    Coffee: the main actors


    Brazil, Vietnam, Colombia and
    Germany are the main exporters;
    More than 50 developing countries
    are highly dependent on coffee
    exports; 25 of them are in Africa
    The two most important producers
    and exporters of coffee in Africa are
    Ethiopia and Uganda.

    Two Different Export


    Models
    African Model
    Production occurs in
    smallholder farmers;
    Involve millions of
    cheap laborers;
    Exports of nonprocessed coffee;
    Exports depends on the
    middle men and global
    buyers;

    Germany Model
    no production:
    Germany re-exports
    processed coffee at
    prices up to five times
    more than what it pays
    for the product;
    Exports are controlled
    by domestic brands;
    Belgium, Italy and USA
    follows the Germany
    model.

    Coffee Global Value Chain


    Input Output Stages
    Inputs

    Growing/
    Processing

    Mediators

    Roasters

    Seed

    Harvesting

    Facilitate trade

    Roasting

    Supermarket

    Land

    Processing
    (i.e., wet method,
    dry method)

    Grinding

    Food Service

    Blending

    Mass
    Retail
    Coffeeshops

    Irrigation

    Parchment Coffee
    (seed coat removed)

    Fertilizer
    Labor

    Retail

    Brewing

    Machinery

    Producing Countries
    Developing Countries
    (Brazil, Vietnam, Ethio
    pia, Costa Rica)

    Consuming Countries
    Developed Countries
    (U.S., Italy, Germany)

    Coffee Global Value


    Chain Actors
    Drivers
    Inputs

    Growing/
    Processing

    Mediators

    Small and Medium Producers

    International
    Trader

    Estates/Plantations
    Marketing Board

    Cooperatives

    Roasters

    Retail

    Branded
    Manufacturers
    i.e., Nestle, Sara Lee
    Branded Blends
    (i.e., Starbucks)
    Independent
    Roasters

    Exporters

    Producing Countries
    Developing Countries

    Consuming Countries
    Developed Countries

    GVC Structure Open


    Questions
    What are the differences between global
    value chains and local value chains in
    shaping upgrading? (social,
    environmental, economic)
    Does concentration of the industry along
    the International Traders and Roasters
    segments make upgrading easier, harder?
    Do mediating bodies help growers? Are
    there differences between large and
    small?

    Environmental upgrading:
    Coffee Life Cycle
    Exporting
    countries

    Developing
    countries

    Importing
    countries

    Source:
    Salomone, 2003

    Main environmental issues


    & upgrading
    Cultivation
    Pollution and eutrophication
    (pesticide and fertilizer use)
    Water consumption and
    pollution
    Depletion of soil
    Deforestation (shadow vs.
    sun)
    Biodiversity (shadow vs. sun)

    Processing (wet vs. dry)


    Water consumption and
    pollution
    Energy consumption
    Air pollution

    Open questions
    What pesticides and
    fertilizers are used?
    measures of water
    pollution/eutrophication

    Differences between big and


    small farms approaches and
    impacts?
    Is the shade grown coffee
    more environmentally
    friendly?
    what are the differences in
    productivity?

    Is it possible to reduce the


    quantity of water used in the
    wet processing?
    Reduction of impacts
    through corporation?
    how to promote it?

    Is water treatment in place in


    the wet process?

    Main environmental issues


    & upgrading
    Consumption
    Water use
    Waste production
    (e.g. through away
    cups)
    Energy
    consumption
    Air pollution

    Open questions
    How much water
    and energy are
    used?
    Technologies to
    reduce the use of
    water and energy in
    the coffee machine?
    How to promote the
    reduction of waste?

    Is it possible to combine environmental


    upgrading with social and economic?

    Social upgrading in
    coffee chains
    Who are the workers and different
    dynamics (Regular vs. irregular, ethnic
    minorities, gender composition and child
    labor, seasonal)
    Output standards on quantity
    (employment creation) and quality of
    labor (wages, hour, benefits, contracts)
    Enabling rights (freedom of association,
    discrimination, force labor)

    Social upgrading in
    coffee chains (2)
    Whats the role of global buyers on
    labor and environmental upgrading?
    Do smaller producers workers have
    rights compared to
    exporters/marketing boards?
    Do the pickers have organizing
    rights?

    Economic Upgrading:
    making money out of a
    commodity
    Product upgrading:
    Specialty blending
    Sustainable coffee

    Process upgrading:
    Wet vs. dry processing (?)

    Functional upgrading:
    From harvesting to branding and roasting

    Branding and
    differentiating
    New way and loci of consumption
    Local tastes and culture
    New blends
    Brands: values and sense-making
    Role of distribution
    Crisis

    Illy: upgrading, branding


    & sense making

    Labels for a better world

    Labels for a better world


    Sustainability and quality
    Private vs. Public, global vs. national,
    coffee specific vs. general
    Costs to put in place the certification as
    barrier to entry?
    Crisis?
    Collective actions?
    Who benefits?
    Real value of certifications?

    Overall questions
    How does the structure of the chain affect the types of
    upgrading?
    Driving players, mediators & upgrading strategies?
    Cooperatives? Better relations with international
    traders?
    What are the conditions to (functional) upgrade?
    Is there upgrading potential more through domestic or
    international market and impact on chain dynamic?
    Whos capturing the gains?
    Can economic upgrading comes along with social and
    evironmental ?
    Why are some developing countries not upgrading?
    Is there a local development driven by upgrading
    strategies?

    Methodology
    Case studies: Brazil, Costa Rica, Ethiopia
    and Vietnam.
    Two main research questions:
    (1) how producers in developing
    countries were able or not able to
    upgrade and improve labor and
    environmental standards?
    (2) under what circumstances producers
    in developing countries succeeded in
    pursuing (functional) upgrading?

    Methodology (2)
    We will use historical narratives to
    develop causal explanation and pattern
    matching (comparisons between different
    cases).
    The focus of the research will be to
    understand the sequence of events that
    leads to economic, environmental and
    social upgrading;
    We will use the existing typologies of the
    GVC literature to classify the case of
    upgrading.

    Strategy of the research


    Analyze many papers and data avalible from secondary
    sources;
    Identify the independent and dependent variables
    (upgrading) and develop typologies of upgrading based on
    the GVC literature;
    Interview bussiness associations, small producers,
    international traders, and government representatives in
    each one of the four countries;
    Interview global buyers (branded manufactures) in some
    developed coutries.
    Revise the intial hypotheses, develop conditional
    generalizations and write the paper.

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