Upgrading in Primary Commodity Value Chains: the Cases of Cocoa and Coffee

EasyChair Preprint 5838

Abstract

Despite the growth in specialty markets for some commodities (coffee, organic beef and cereals, to name a few), the bulk of primary commodities traded use as benchmark the prices quoted in international exchanges. The paper shows that the bubble in primary commodity prices observed in the 2000s was relatively short-lived but significant, especially if compared with manufacture export prices from developing countries. The analysis also shows that producers of tropical commodities, harvested mostly in developing countries due to their weather requirements, benefitted the most from the boom observed in the 2000s.

The analysis shows that, for most products, the unit values for developed countries are higher than those for developing country exports. It focuses on the analysis of the cocoa and coffee value chains, given their twin tendency for standardization in the mainstream market and increasing differentiation in the specialty market. The analysis indicates upgrading in some cocoa related products but not in coffee products. The literature review suggests that the value chain of coffee is less prone than cocoa to upgrading in countries of origin. 

In both cocoa and coffee, the material attributes of the products (the beans) are commoditized, while in-person services and symbolic attributes generated through branding, packaging, retailing and consumption are appropriated downstream in the value chains. Although fair trade began as an attempt to de-commoditize the coffee trade, it is now increasingly driven by large coffee brands as another market-capture tool via a process of ‘re-commoditization’. In addition, ideas of quality and reputation (“Swiss chocolate is the best”) are collective constructs aided by institutional support. The paper suggests that place association through geographical indications may be a promising avenue for de-commoditization of primary products.

Keyphrases: Cocoa, Cocoa value chain, Commoditization, Global Value Chains, coffee, coffee value chain, commodity price, primary commodity, specialty coffee, upgrading

@booklet{EasyChair:5838,
  author    = {Mariangela Parra-Lancourt},
  title     = {Upgrading in Primary Commodity Value Chains: the Cases of Cocoa and Coffee},
  howpublished = {EasyChair Preprint 5838},
  year      = {EasyChair, 2021}}