Green or roasted coffee

Green or roasted coffee

Blog Article

1. Introduction
The analysis of governance and diverse power struggles in global value chains (Grabs & Ponte, Citation2019) is often connected to value capture foreseen in economic expectations based on profit maximization by lead firms (e.g. Gereffi et al., Citation2005; Kaplinsky, Citation1998; Sturgeon, Citation2009; Talbot, Citation1997). Indeed, global value chains are more than just means for the global exchange of economic goods and capital flows, as they also connect ‘people across culture, class, age, gender, race, ethnicity, citizenship and religion and create interrelated webs of social relationships’ (Reinecke et al., Citation2018, p. 460). This paper reveals how value capture in the coffee sector is related to the management and controlling of coffee quality attributes (e.g. material, symbolic), highlighting the relevance of the relational and knowledge dimensions of actors in Colombia, Europe and the USA. Specifically, the paper seeks to understand how producers are able to capture value to contest the coffee paradox, e.g. the extent to which producers are able to create and control the value set in the material, symbolic and in-person service quality attributes (Daviron & Ponte, Citation2005) of coffee as a crop and end product.

To drink a cup of coffee, coffee cherries must undergo several processes and movements leading to diverse outcomes and value-added (Figure 1). After harvesting the cherries, various processing methods (e.g. washed, natural) are followed and the outer layers of skin and pulp from the cherries are removed (ITC, Citation2021). Green beans are sorted according to certain criteria, e.g. size, number of defects, etc (ITC, Citation2021). At this point, the coffee is ready to be roasted and packed, e.g. ground or as whole bean for sale to the end consumer. The extended and long-existing coffee trade practices rely on shipping green coffee to importing countries, where it is roasted, packaged, marketed and sold primarily through coffee shops, supermarkets or e-commerce (ITC, Citation2021).

Figure 1. The illustrative example of the fragmented knowledge-based global value chain for coffee. Source: Adapted from Tröster (Citation2015).

Figure 1. The illustrative example of the fragmented knowledge-based global value chain for coffee. Source: Adapted from Tröster (Citation2015).
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Thus, division of labor and knowledge have become established in coffee production, processing, trade and consumption (Figure 1). Usually, the value capture by producers is minimal and depends on the value-added they are able to incorporate to the harvested coffee cherries. About 10% of the income generated by the coffee industry remains in origin countries, compared to 30% approximately 30 years ago (Giuli, Citation2021). Information on the degree of concentration in the coffee trade sector is scarce. The leading companies are privately owned and therefore not obliged to share data and figures publicly (Panhuysen & Pierrot, Citation2018). The Specialty Coffee Transaction Guide (Emory University et al., Citation2023) provides relevant price benchmarks for differentiated coffees, but does not provide the value share of downstream actors (e.g. roasters). However, it creates an anonymized and aggregated dataset that provides context for coffee price negotiations based on quality scores, volumes purchased and country of origin (www.transactionguide.coffee).

International buyers and processors are the ones who ultimately capture the value of the work done by producers at origin when leading actors (e.g. roasters, retailers, brand owners, shop owners) sell roasted coffee or (sophisticated) brewed beverages to consumers. All these imbalances in value capture (e.g. producers mainly exporting a raw material, roasters selling end products, coffee shop owners selling beverages) denote the coffee paradox coined by Daviron and Ponte (Citation2005). Value is realized through the achievement of coffee quality attributes. The quality attributes (material, symbolic, in-person service), already defined and embedded in the coffee quality conventions, are achieved on the basis of the knowledge of the (chain and non-chain) actors involved, as well as access to financial and technological resources. The added value then results from the exchange of the different coffee outputs, based on the quality attributes, from one actor (e.g. producer) to another (e.g. roaster). In this exchange some (invisible) work is required to create the added value, e.g. the unpaid work of female workers at the agricultural nodes of the value chain. The well-informed segment of aspirational consumers pays not only for the material quality of coffee, but also for its symbolic quality attributes (e.g. ethical, environment-friendly practices) usually communicated via labels and for in-person service quality embedded in coffee cups sold at shops (Daviron & Ponte, Citation2005).

Institutional settings guiding the coffee sector. In 1989, the coffee market liberalization was orchestrated by the dismantling of the quota system and price bands agreed upon among origin and importing countries, embodied in the International Coffee Agreement (Acheson-Brown, Citation2003; Daviron & Ponte, Citation2005; Gilbert, Citation1996). Since the late 1980s, producers have faced constant pressure to conform to several voluntary standards despite the diverse national institutional settings supporting (or not) the compliance to voluntary standards, e.g. Organic, Fairtrade, Rainforest Alliance & UTZ (Dietz et al., Citation2018; Glasbergen, Citation2018; Grabs, Citation2020; Naylor, Citation2014; Ramirez Gomez et al., Citation2022; Raynolds, Citation2009).

More recently, initiatives have been established to calculate the ‘True Price’ and pay it to producers (True Price, Citation2017), to stop the use of the C-price for Arabica and Robusta coffee (set on the New York and London Stock exchanges, respectively) to cope with the speculation behind it (Boydell, Citation2018) or to establish a Coffee Equity Fund (Panhuysen & Pierrot, Citation2020). As a countermeasure, origin countries have begun to develop and administer their own voluntary standards (Hospes, Citation2014; Tepox-Vivar & González-Cabañas, Citation2021). Emerging alternative markets are guided by principles, e.g. collaboration, partnership, or relational coffee models between upstream, downstream actors and related stakeholders (Edelmann et al., Citation2022; Fischer, Citation2022; Guimarães et al., Citation2020; Quiñones-Ruiz, Citation2021; Vargas-Prieto & Castañeda-Guzmán, Citation2019). Likewise, there are initiatives to calculate the Return to Origin (RTO, defined as the percentage of coffee retail sales that goes back to the coffee supply chain (www.transparenttradecoffee.org)), or to revise existing quality conventions and business models for trade in de-commodified coffee (Muñoz-Rodríguez et al., Citation2019). Precisely this paper aims to examine the conditions by which quality conventions in coffee can be revised.

The next section presents the analytic landscape guiding this study, namely the coffee quality attributes, highlighting the relevance of the relational approach and knowledge building, followed by the methods analyzing the value chain of a collective of producers in Colombia and some selected international buyers. Results are presented followed by the discussion and conclusion.

2. Analytic landscape
Global value chains are suitable examples to reveal coordination mechanisms to be adopted by chain actors and observe how value is created and captured based on the quality attributes pursued by chain actors From a sociological notion of convention, we refer to a normative principle that prescribes a concrete action in a given situation of social interaction usually accompanied by a regularity of behaviour (Miller Moya, Citation2008). The actions can be tacitly and jointly accepted by a collective and the source of its obligatory nature lies in the existence of mechanisms of approval or disapproval of behaviours (Miller Moya, Citation2008). Specifically, Boltanski and Thévenot (Citation1991, Citation2006), Diaz-Bone (Citation2018) guide the discussions on the ‘quality turn’ in agro-food studies in the convention theory from a sociological notion.

Under the lens of convention theory quality is regarded as a device to be able to conform, as a result of communication on and negotiations of product quality criteria. These criteria are synthesized in specific practices and procedures created as objective references what prevents the notion of quality to be reduced to an abstract or subjective idea. Product quality ‘is not an ontologically given property but rather a social construction’ (Diaz-Bone, Citation2018, p. 80). Specifically, to understand quality in coffee, Daviron and Ponte (Citation2005) categorize three quality attributes: (1) physical/material, (2) symbolic and (3) in-person service attributes to support coordination among coffee chain actors. Material attributes are embedded in the product, they are intrinsic and can usually be measured by human senses such as vision, taste, smell, hearing and touch or by using precise devices and protocols (Daviron & Ponte, Citation2005, p. 34).

The Specialty Coffee Association (SCA) has set specific lexicon, protocols and evaluation forms and best practices concerning green coffee grading, cupping or brewing (SCA Citations.a.). These are common tools to evaluate the material quality of coffees (M1 + M2, Figure 2). According to the SCA, coffees reaching 80 through 100 points during cupping evaluations and attaining certain attributes (e.g. acidity, body, sweetness, etc.) are considered as specialty coffees (SCA Citations.a.). It is worth-noting that the material attributes of the cup are not objective per se, they are objectified based on the standardization of the characteristics of the beans mainly made by downstream actors (e.g. buyers/roasters) and related stakeholders in core economies. Symbolic quality refers to attributes often embedded in trademarks, geographical indications and voluntary standards generally institutionalized through certification schemes and communicated via labels e.g. Organic or Fairtrade (Daviron & Ponte, Citation2005). While ‘trademarks enable the ‘consumption of an enterprise’, geographical indications promote the “consumption of a place”’ (Daviron & Ponte, Citation2005, p. 37). These values are embedded in symbolic quality attributes (S1, Figure 2). Certifications allow additional economic and symbolic values to be attached to agricultural products at the retail stage, without necessarily improving the income of producers (Dong & Liang, Citation2023).

Figure 2. Linking quality attributes for coffee with a relational approach and knowledge building. Source: Adapted from Quiñones-Ruiz (Citation2020).

Figure 2. Linking quality attributes for coffee with a relational approach and knowledge building. Source: Adapted from Quiñones-Ruiz (Citation2020).
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Likewise, we attempt to study the ‘ignored’ efforts and conditions needed to generate value usually not codified in the quality definition, e.g. dealing with efforts, local conditions (e.g. difficult access to infrastructure), and narratives (e.g. gender relations) silently faced by producers: symbolic quality attributes (S2). This shall present what it is invisible for industrial processors and consumers to achieve purpose and fairness in production, processing, trade and consumption. Service quality attributes refer to the in-person attributes portraying the relation between café workers and consumers at coffee shops (Daviron & Ponte, Citation2005). We also add the online service attributes when roasted coffee is sold online portraying the feedback ((dis)satisfaction) of consumers based on the service provided during the transaction experience, e.g. user-friendliness, information provided during online purchasing of (specialty) coffees. The value generation and capture can be identified in the attainment of the quality attributes along the coffee chain.

The proposed framework seeks to also uncover relational processes dealing with the building of close relationships and trust (Edelmann et al., Citation2022) as well as the way knowledge is created, shared and controlled by actors (e.g. producers, processors) to generate and capture (e.g. economic) value. The relational processes and (fragmented) knowledge observed across global value chains permit to analyze them as social entities. The social approach to assess global value chains (Reinecke et al., Citation2018) provides an alternative lens to contest the still historic narratives of how global value chains shall function, be organized and analyzed. In this paper the authors consider the quality attributes to analyze value generation and capture and do not engage on the upgrading of primary products as an approach for global value chain analysis (e.g. Gereffi et al., Citation2005; Gibbon, Citation2001)Details