The global value chain for coffee: Coffee paradox
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Coffee as a drinking is the output of value chain beginning with the tree in farm. Currently there are 2 species being used in commercial purposes: Coffea Arabica and Coffea canephora (Known as Robusta). Since from harvest to trade and export, coffee pass many step of primary processing. The goal of the main process is to separate the bean from the skin.
When coffee arrived in consuming countries, they got some tread and another operation. First, coffee is blended. Blending from various coffees from various countries used to get a specific aroma. They also did this process to keep and manage the natural variability of coffee.
What we`ve seen and the association of coffee drinking are different as they were twenty years ago. the coffee market has gone through as “latte revolution”, where consumers can choose from (and pay dearly for) hundreds of combinations of coffee variety, origin, brewing and grinding methods, flavoring, packaging, “social content”, and ambience. Retail coffee prices continue to rise in the specialty market, event in the mainstream market they have not decreased nearly as much as international coffee price have. Roasters capture increasing profit margins. At the same time, coffee farmer receive prices below the cost of production.
The global value chain for coffee is currently characterized by a “coffee paradox”: a “coffee boom” in consuming countries and a “coffee crisis” in producing countries. This paradox exists because farmers and other producing country operators sell coffee in its material quality attributes. Consuming country operators create and appropriate value by selling the symbolic and in-person service quality attributes of coffee.
There are theoretical approaches to solve this commodity problem. These three theories to link the solution are:
1. Changing quality
2. Promoting transparency and consumer-producer connectivity
3. Territoriality as a vehicle for embedding value at the production level
4. Consumers (and other actors along the chain) as agent of change
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Extracted from: Daviron, Benoit and Ponte, Stefano (2005), The Coffee Paradox: Global markets, commodity trade and the elusive promise of development. London, Zed Book
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