1. Coffee GVC Memo
Almeida, Christian, De Marchi, Mannino
Duke-VIU Workshop, 2009
Memo: Coffee GVC
From: Mansueto Almeida, Michelle Christian, Valentina De Marchi and
Ilda Mannino
INDEX
HOW TO PROMOTE SOCIAL AND ECONOMIC UPGRADING IN THE COFFEE VALUE CHAIN
........................................................................................................................................ 2
1. Introduction ............................................................................................................. 2
2. Coffee Industry: an overview ................................................................................... 2
3. The Global Value Chain (GVC) of Coffee ................................................................... 5
3.1. Economic Upgrading .......................................................................................... 8
3.2. Social Upgrading ................................................................................................ 9
3.3. Environmental Upgrading ................................................................................ 10
3.4. Labels .............................................................................................................. 12
4. Methodology ......................................................................................................... 12
5. Bibliography ........................................................................................................... 14
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HOW TO PROMOTE SOCIAL AND ECONOMIC UPGRADING IN THE COFFEE
VALUE CHAIN
1. INTRODUCTION
Fitter and Kaplinsky aptly posit in their discussion regarding avenues for developing countries to
advance their economies in positive forms that “the key challenge thus confronting policy design and
implementation is not whether to participate in global processes, but how to do so in ways that provide
for sustainable income growth” (2002: 70). Economic and income growth notwithstanding, social and
environmental growth, are also hoped for consequences to participation in the global economy. As
Fitter and Kaplinsky note, however, the way in which countries are incorporated into global processes
mitigates their overall growth potential. Moreover, economic growth may not lead to social and
environmental advancement.
Following this notion, we briefly examine the global value chain of coffee to unpack the layered
dynamics that represent the industry and how those dynamics complicate or make accessible
developing countries’ capability to economically, socially, and environmentally upgrade. The coffee
industry provides an example of how an agricultural commodity can be seen as a means for developing
countries to participate in global value chains with varied results depending on their position in the
value chain and the global, national, and local institutional environments which global and local coffee
value chains are embedded. With our analysis we hope to create the groundwork for a research project
that explores the complicated nexus between forms of upgrading and national contexts.
Therefore, below we put forward a brief research memo where we highlight the background and global
context of the coffee industry, a rough sketch of its global value chain, and issues relating to
upgrading. We end with a research design project analyzing the industry from the country cases of
Brazil, Ethiopia, Costa Rica, and Vietnam. These four cases allow us to address the themes
we highlight in the memo from varying national foundations.
2. COFFEE INDUSTRY: AN OVERVIEW
Coffee is a genuine world product. It is an important product cultivated in many African countries
(such as Ethiopia and Uganda), Latin American countries (Brazil, Colombia and Costa Rica) and
Southeast Asian countries (Vietnam and Indonesia). In addition, it is also an important export
“commodity” for many countries, including developed ones such as Germany. Coffee is such an
important product for developing countries’ exports that in many years it is second in value only to oil
as a source of foreign exchange to these countries. Its cultivation, processing, trading, transportation
and marketing provide employment for millions of people worldwide.
Coffee is bought and sold by roasters, investors and price speculators as a tradable commodity and has
its price set in the New York Mercantile Exchange (NYMEX) and in the London International
Financial Futures and Options Exchange (LIFFE); but this was not always the case. Up to the 1990s,
the main producers of coffee participated in the International Coffee Organization (ICO), which was
established in 1962/63, and used to put in place a quota system through the International Coffee
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Agreement (ICA). This system set the amount of coffee that producers were allowed to produce and
export. Although the organization is still active today, since 1989 the ICO has not been able to impose
price controls and quotas for producers and the market today is deregulated, following a dynamic
driven by the procurement policy of the roasters in what Gereffi (1994) calls a buyer-driven commodity
chain1.
The world demand and supply of coffee has followed a cyclical pattern driven by prices on the world
market. It seems that the industry of coffee suffers from what Talbot (2004) calls a “structural
oversupply” trend that will not be corrected by supply and demand. Whenever the price of green coffee
(i.e., traded coffee form before roasting) goes up, the production increases in the next period bringing
prices back again to its previous levels. The average monthly coffee price in international trade was
well above 100 US cent/lb during the 70s/80s under the ICA regime, but then declined during the late
90s reaching less than 50 US cents/lb in 2001 (see Figure 1).
Figure 1 – World Price of Coffee (1980-2009) – US Cents per lb. Source: The International coffee
organization
Falling prices are explained by the increased production under a free market environment. Since 1990,
the world production and consumption of coffee has increased steadily and in the last years, (2001-
2008), world coffee exports went up from 108 million to 134.2 million of 60-KG bags – a 24% increase
in seven years. Today, more than 50 developing countries, 25 of them in Africa, depend on coffee as an
export, with 17 countries earning 25 per cent of their foreign exchange from coffee.
The main coffee exporters, according to the 2008 data from ICO, are Brazil (34.28% of the world
market); Vietnam (14.53%); Colombia (9.17%) and Germany (9%). Germany is a major exporter by
1
Talbot (1997) states that the collapse of the ICA regime, and increased consolidation in the coffee industry, has
affected the distribution of total income generated along the coffee chain. In the 1970s, an average of 20 per cent
of total income (the total amount of money spent by consumers to purchase coffee products for final
consumption) was retained by producers, while between 1989/90 and 1994/95 the producers’ share decreased to
13%. In the same period, the share of the total income retained in consuming countries went up from 53% to
78%.
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re-exporting part of its imports. In 2007, Germany imported 19.5 million 60-kg bags and exported 10.7
million bags; while Brazil exported 36 million bags in 2007 and 45.9 million in 2008. In Africa, the
two most important produces are Ethiopia (3% of the world export market) and Uganda (2.5%-3%).
How can developed countries such as Germany, Belgium and even the USA appear side by side with
developing countries as major exporters of a commodity such as coffee? The reason for this apparent
paradox lies in the global value chain (GVC) – see Humphrey and Schmitz (2002) and Gereffi (1994).
Usually, developing countries focused on producing and harvesting, the least profitable nodes in the
value chain, while developed countries focus on roasting, branding and selling the packaged coffee to
specialty stores in domestic markets and abroad. About 8% of the price of coffee in a U.S. supermarket
goes to farm labor, and another 5% goes to the grower while 67% goes to the company that does the
roasting, grinding, packaging and shipment, and 11% goes to the retail store. Thus, most of the value is
captured in the roasting segment.
The roasted coffee business is controlled by multinationals such as Kraft (owner of the famous
Maxwell House brand), Nestlé, Proctor & Gamble (owner of Folgers and other brands) and Sara Lee.
These four companies are responsible for over 40% of worldwide sales. In addition, contrary to the
third world countries that grow coffee beans, these companies are not affected by the falling prices. In
fact, these multinational companies earn more not less when the price of the coffee beans goes down
because much of the price charged to consumers is beyond the actual costs of growing the coffee. This
is typical in a market where MNCs are oligopolistic on the seller side and oligopsonistic on the buyer
side. In addition, MNCs use their financial power whenever necessary to hedge against price
fluctuations in the future markets.
How come developing countries do not start their own roasters to move up in the value chain? In fact,
in July 2009, the Good African Coffee factory at Bugoloobi in Uganda started to operate the first coffee
roasting and packaging factory in the whole of Africa to export coffee to supermarkets in the UK2. This
was part of a US$ 1 million investment in a public-private partnership with the government. This,
however, is not an easy path to pursue since this company will need to break into a highly competitive
market controlled by a few MNCs and branded name roasters and sellers as illy from Italy and
Starbucks from USA.
The challenge for countries that grow coffee beans to develop and export their own brands is similar to
the challenge apparel and footwear producers in developing countries find to export their own brands.
Usually, firms in these labor-intensive sectors from developing countries are successful in participating
in the global markets as suppliers for leading global firms, but they have a hard time when they try to
market their own brands.
Another problem is that there are time constraints involved in trading roasted coffee versus green beans
coffee. The former is a perishable product that last only for five days while the latter can be stored from
two to ten years. Therefore, producers need to control sophisticated packaging techniques in addition of
the roasting process to move up the chain and become a roaster. For some low-income countries such
as Ethiopia, this means learning a manufacturing process far more complicated than planting and
harvesting coffee beans.
2
See http://www.newvision.co.ug/D/8/12/688235
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There is no easy solution on how to increase coffee growers’ share in the GVC. Some authors believe
that because coffee is very easy to produce and the production will always follow price increases, the
only way of improving prices for low-income growers in developing countries is controlling
production and world exports again through a new International Coffee Agreement for the XXI century
(see Talbot 2004). However, before jumping again to control the world production of coffee it is
important to see different alternatives that might help small producers in developing countries to
benefit more in participating in the coffee business; i.e. how producers in developing countries are able
or not to upgrade and improve labor and environmental standards. This is the key question we want to
answer in this research.
BOX 1 – Two Examples of the Importance of Coffee for African Countries
A) Uganda: Coffee accounts for 20%-30% of Uganda’s exports earnings and the country has an
explicit policy to attract foreign investors to increase coffee production and exports. Though large-scale
coffee producers are gradually emerging, the coffee sub-sector is almost entirely dependent on about
500,000 smallholder farmers, 90 percent of the farms with a size ranging from less than 0.5 to 2.5
hectares. The coffee industry employs over 3.5 million families through coffee related activities.
B) Ethiopia: The trade of coffee is Ethiopia's largest export, which generates 60% of its total export
earnings and 20% of the government revenue. Nearly all of Ethiopia's coffee bean production is still by
hand, from the planting of new trees to the final pickings, which are then sent to the big warehouse.
The coffee business employs about one out of every four people in the country (around 15 million
people) and peasants on small farms of less than a hectare produce 98% of the coffee. State farms
produce the remaining 2%. All the coffee processors and warehouse enterprises are modern, and state-
owned. In spite of producing one of the best green coffee beans in the world, Ethiopia is the poorest
country in Africa and one of the poorest in the world.
3. THE GLOBAL VALUE CHAIN (GVC) OF COFFEE
The actual input-output stages of the coffee global value chain have changed relatively little over the
last one hundred years. In Figure 2, we highlight the five main stages of the chain. First are all the
inputs which go into the growing and harvesting stage. Second, immediately following harvesting, the
red cherries are processed in either a “dry method” or “wet method” to become parchment coffee seeds
where then the parchment coat is removed from the seeds yielding green coffee beans. At the green
coffee bean stage the beans are ready for export if they are heading for an international market. The
green coffee travels through a series of intermediaries who facilitate trade in producing and consuming
countries before reaching the roasting stage. At the roasting stage, green coffee goes through another
round of processing depending on the final coffee product, i.e, instant coffee, blends, specialty drinks.
From there the final coffee product is distributed to consumers at different retail ends.
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Figure 2 – GVC Input Output stages
What has changed over the last twenty years, however, according to Ponte (2002) is the deregulated
global trading context that traditionally stabilized coffee prices; new consumption patters spearheaded
by specialty blends, brands, and trends; and corporate strategies that have solidified new power
relationships along the chain. These changes situate how economic, social and environmental
upgrading was possible or negligible for our four country cases. As mentioned, a wider global trend is
the power shift to consuming countries after the collapse of the international coffee agreement in 1989
with consuming countries gaining up to eighty percent of total income (Ponte 2002).
Actors in the downstream activities of the chain - mediators, roasters, and retailers - embarked on a
series of corporate strategies to ensure supply and demand by shaping availability and product options.
Ponte (2002) argues that roasters are the current drivers of the chain, see Figure 3. Roasters are most
prominently the branded manufacturers, e.g., Nestle, Sara Lee, Kraft Foods, who are large transnational
corporations with several brands within their portfolio, e.g. Maxwell House in Kraft. The top five
roasters have over sixty percent of the market. The concentration of roasters has happened with the
concentration of international traders, as well. Roasters have placed larger demands on international
traders to ensure quality and supply of green coffee. International traders are beginning to rely more on
first and second line suppliers. In order to guarantee supply international traders are also becoming
more integrated in some upstream activities. As experts in logistics and awash with capital they play
important intermediary roles connecting producing and consuming countries.
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Roasters and retailers have further strengthened their position by cultivating new consumption demand.
Coffee has moved away from just being the morning “fix” people need to start their day. It has become
an "atmosphere," a "latte revolution." Specialty drinks and gourmet blends began to be mass marketed
in the last twenty years and neighborhood coffee shops began expanding in the United States and other
developed nations. Starbucks, as a branded manufacturer and retail outlet, has personified this growth.
Starbucks Chairman Howard Schultz has called going to Starbucks an "experience." This form of
branding has allowed a specialty coffee drink to market for $4 dollars because the "product they are
offering is not coffee, it is the ambiance, the image associated with costly coffee consumption" (Fitter
& Kaplinsky 2001). In addition to specialty differentiated drinks, some manufacturers and retailers
have also adjusted to the growing corporate social responsibility trend where consumers have begun to
demand coffee beans, blends, and products that fall under the umbrella of "fair trade." Fair trade coffee
can include guarantees to consumers that the coffee was grown, packaged and transported with
environmentally friendly practices or that farmers were guaranteed a higher price per bag.
Figure 3 – Coffee GVC actors
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3.1. Economic Upgrading
From a research perspective, the structure of the chain with power relationships concentrated in the
international trader, roaster, and retail end, elucidates several questions regarding upgrading. Possible
economic upgrading paths that developing countries’ firms may undertake are:
 Product upgrading: specializing in specialty, high quality coffee and blending or specializing in
“sustainable” coffee
 Process upgrading: new processing techniques (e.g., wet vs. dry processing)
 Functional upgrading: from harvesting to branding and roasting
For economic upgrading, there seems to be two key themes: 1) how can producing countries become
manufacturers or brands? Or, 2) how can growers receive better prices and terms of trade from green
coffee? The former seems the better option since from the analysis of the global value chain it is clear
that the higher concentration of value is in the latter steps of the value chain. However, it is also the
most challenging, involving the need for new skills, funds and knowledge of the final market in order
for farmers to add this function. The following questions fall under both themes.
 Under which circumstances are firms able to functionally upgrade? What set of skills are
needed?
 What are the barriers of entry for producing countries to create their own brands?
 What is the role of cultural capital in facilitating brand identity and creation?
 What are the barriers of entry for producing countries to become modular suppliers for branded
manufacturers (i.e., make instant coffee for brands under their labels)?
 Do growers have a better position in the value chain if they work in small hectares, cooperatives
or as large plantation estates?
 Do branded manufacturers ever buy directly from growers, bypassing mediators? If so, when
and why?
 Are there value added differences between the wet and dry forms of processing immediately
following harvest?
 Does the growth of "fair trade" equate to better income for growers?
Talbot (2002) argues that forward integration, or economic upgrading, is most possible when states
pursue aggressive industrial policy; there is a strong "capitalist class," and a large domestic market or
local demand. The latter issue may point to a more viable outcome for original brand manufacturer
upgrading for producing countries since they know local preferences, have local industrial knowledge
and MNC competition is less severe. In the case of Brazil, as Talbot (2002) acknowledges, local
manufacturers were able to become stronger modular suppliers of MNC instant coffee brands than
breaking into developed countries’ markets, but Côte d'Ivoire found that pursuing a foreign direct
investment policy for coffee created limited backward linkages. Regardless of producing countries'
ability to become manufacturers they are limited due to the delicate storability and transportability
issues ground coffee products have and because MNC manufacturers are more aggressively setting-up
their own manufacturing subsidiaries in producing countries. Nevertheless, there are some "success"
stories such as the Cafe Brit brand in Costa Rica.
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It is also important to add consideration on the consumers’ side with regards to economic upgrading.
This has proven to be true especially for fair trade coffee, which will be discussed later (Raynolds
2002). Change in coffee consumption activity like how recent innovations are fostering new ways and
new places where to consume (e.g., Starbucks) is impacting economic upgrading. Furthermore, the
consumer is becoming more and more sophisticated, appreciating different blends and global coffee
roasting mixes. However, country differentiation both in tastes and culture seems important
differentiation factors. A deeper analysis of secondary sources is needed in order to better understand
the size of such trends.
3.2. Social Upgrading
To understand social concerns and upgrading possibilities it is useful to analyze the different steps of
the entire global value chain. The higher number of social challenges is in the very first steps, regarding
the growing and processing of coffee. The differences in the countries seem interesting to understand,
as well, in order to identify benchmarks and determinant variables. From a social upgrading standpoint
and a decent work agenda, however, it is still unclear how the structure of the chain impact workers
along the chain. For example,
 Has the trend toward more vertical integration in the international traders’ node benefited or
hampered growers' ability to receive more income?
 What are the benefits/drawbacks of grower cooperatives in negotiation with downstream
actors?
 Do the seasonal workers who pick the red coffee cherries receive fair wages, have enabling
rights? Are there problematic gender, racial, ethnic divisions of labor?
 What are the rights of the workers in different chain segments? Has the increased demand for
"fair trade" coffee corresponded to better wages and conditions for growers and pickers?
Currently, there is little knowledge to these questions so fieldwork is needed in order to understand
these dynamics, and in particular to identify both:
 Output standards on quantity, in terms of employment creation in poor countries, and quality of
wages, hours, benefits, contracts, skills development and content of the job; and
 Enabling rights: to investigate the freedom of association, discrimination among different
workers and the presence of forced labor, traditionally employed in these production processes.
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3.3. Environmental Upgrading
In order to identify the main environmental issues linked to coffee it is useful to consider its life cycle,
see Figure 4.
Figure 4 – LCA assessment for the coffee Value Chain
As well represented by Salomone (2003), the coffee life cycle goes through different stages, among
which are cultivation, first processing, roasting, packaging and distribution, and consumption. In
particular, cultivation and the first processing stages (e.g. when the coffee beans are removed from the
fruit and dried before they can be roasted) are carried out in the exporter countries which are
developing countries. The remaining phases are carried out in the importer (and re-exporter) countries.
This means that also the environmental impacts linked to coffee as well as the possibilities of
upgrading vary a lot for exporter and importer countries.
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The life cycle analysis carried out by Salomone (2003) indicates that the cultivation and the
consumption stages produce the greatest impacts. In particular, when speaking about the cultivation the
first aspect to consider is represented by the differences between the shadow versus full sun cultivation.
The latter has a higher productivity, but passes trough deforestation and consequent depletion of soil
and loss of biodiversity. The differences in productivity should be evaluated when considering
environmental upgrading without forgetting the economic and social aspects.
Other important impacts are linked to the use of fertilizers and pesticides that can contribute to the
pollution of rivers and ground waters. Possible environmental upgrading could derive from the
substitution of chemical products with natural ones, but their different effectiveness have to be
considered in order to avoid economic downgrading. Moreover, the consumption of water for irrigation
represents another of the main environmental concerns linked to the coffee cultivation.
Water consumption can also be one of the main impacts during the first processing of the coffee if this
is carried out through the wet method. This method requires a great quantity of water for cleaning the
beans, but seems necessary to arrive to a better quality product. Moreover, in some areas it is not
possible to perform a dry processing due to the air humidity. These are aspects that need to be
considered when looking for the possibilities of environmental upgrading and avoiding the detriment of
economic gains. The environmental upgrading of the processing can probably produce more win-win
solutions if it passes through technological and procedural innovation of the techniques used.
Technological innovation of the machines used for the processing can also bring about to a reduction of
the energy consumption as well as of the air and water pollution.
Environmental upgrading can derive also from organizational innovation. For instance the benefits
from the cooperatives of small farmers have to be evaluated and also what are the methodologies to
promote it.
Concerning the consumption of coffee, issues such as water use, waste production (e.g. throw away
cups), energy consumption and air pollution have to be considered, as well, focusing on the
measurement of how much water and energy are used, what technologies are available to reduce the
use of water and energy in the coffee machine and what possibilities there are to promote the reduction
of waste. It has to be taken into account that upgrading opportunities and modalities can vary from
country to country due to the differences in the modalities of preparation and consumption (e.g., Italian
coffee vs. American coffee).
Some broader research questions regarding environmental upgrading are:
 Do new environmental standards and labeling make it harder for growers to become part of the
value chain?
 Have national industrial policies begun to push for “greener” forms of coffee cultivation and
processing?
 Is it possible for firms to economically, socially, and environmentally upgrade at the same time?
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3.4. Labels
Social and/or environmental certifications for coffee are labels that ensure that is has been grown and
processed according to standards that ensure no violations of workers’ rights and/or the biodiversity
preservation and the lowering of the impact on the environment. There are many types of such labels
on coffee, such as Bird Friendly® Coffee, the 4c Code of conduct for the coffee community, Fair
Trade, UTZ Certified, Rainforest Alliance, and Shade/Bird Friendly initiatives. Some are specific to
coffee, others may apply to a wider range of products; some are private, others are managed by NGOs;
some are local while others have a global coverage; some guarantee the respect of social standards,
others of environmental (even though the majority consider the two issues together). Labeled products
are usually a bit overpriced and focus on a better quality, assured by the respect of the environmental
(and social) standards.
Questions arise if the certifications really reach their goals? Are these products able to compete on the
markets without social, environmental or economic downgrading in the long term? The issue is
challenging (Taylor 2005). Existing studies (Raynolds, Murray, and Heller 2007) underline furthermore
the need of public regulation to play along with private regulation in order to enhance social and
environmental sustainability, and not only uphold current standards.
Furthermore, are some regions or countries collectively upgrading in order to brand themselves and are
they entering in value chains thanks to their environmental and social friendly productions? Why are
other countries not moving in the same direction?
Certifications are also costly: are all the actors able to obtain these certifications that can ensure them to
upgrade? Who capture the gains generated by the premium prices consumers are willing to pay for
these products? (Fitter and Kaplinksy 2001) Who are the excluded actors?
Fieldwork is needed to understand the impact on governance structure, upgrading possibilities and local
development linked with the participation to fair trade networks (Rice 2001). These movements
represent in fact a “type of economic and social restructuring from below” (Rice 2001), enabling local
development and a new relational structure within the chains.
For social and environmental upgrading we may see different possibilities depending on if the value
chain is global or local. For example, labor and environmental standards may be pushed from roasters
and retailers in global value chains, but not in local. Furthermore, environmentally upgrading may lead
to social downgrading if fewer growers are able to compete in this new niche market.
4. METHODOLOGY
In this study we are interested in understanding under what circumstances producers in developing
countries can upgrade and reap higher benefits in the production and trade of coffee. Therefore, this
research is a small-N one and we will use a mix of methodologies traditionally employed to make
within-case analysis3: pattern matching, process tracing and causal narrative.
We will select comparable cases in four different developing countries (Brazil, Costa Rica, Ethiopia
and Vietnam). These four countries are important growers of coffee beans and in all of them coffee
3
See Mahoney (2000), Mahoney and Rueschemeyer (2003) and George and Bennett (2005).
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growers face barriers to upgrade, especially in Ethiopia and Vietnam. On this stage, we will select and
compare successful cases of upgrading (economic and social) and through these comparisons set the
hypotheses to investigate more deeply each case. This is the step where we will identify the major
independent variables that might explain producers’ upgrading strategies.
In the next stage, we will try to link the identified variables in the first stage with hypotheses linking
these variables with the observed outcomes. This step will help us to eliminate what it is called in the
literature “spurious correlation” when two variables appear to be correlated but they are in fact the
product of an antecedent variable. We can eliminate this problem looking carefully on the casual chain
between the independent variables and the upgrading process that we want to understand and explain.
For instance, we might find a strong presence of governmental officials in those places that coffee is
cultivated and some kind of upgrading occurred. But the presence of governmental officials might be
linked to tax collection or government auction and not necessarily to the processes that led to
upgrading. Therefore, in accessing the causal relationship between independent variables and the
upgrading process we would eliminate the presence of local government officials as an important
factor, although it might be presented in all the selected cases.
At last, we will go deep into each case to understand the causal mechanism behind successful cases of
upgrading, trying to disaggregate the actual sequence of events that led to different types of upgrading
(causal narrative) in each case. Although small-N analysis have some methodological problems such as
the problem of identifying the necessary and sufficient conditions (see Lieberson 1992) and the
problem of spurious correlation, this methodology allows the research to deal with the problem known
as equifinality, when different paths leads to the same outcome which in our case is economic and/or
social upgrading. Therefore, this method seems to be the most appropriate one to this kind of research
since we are more interested in understanding the different causal mechanisms that leads to economic
and social upgrading than in establishing a statistical relationship. Also, we are more interested in
assessing how and whether a variable explains the observed upgrading than in measuring how much it
mattered.
One last point is important here. We could easily design a research methodology based on large-N
cases and identify the most important variables to explain economic and social upgrading. But this
alternative methodology for this specific research leads to three problems. First, since we are
conducting these studies in developing countries, there is no reliable statistics available for the many
cases we want to investigate of small and medium coffee growers in the countryside. Second, a
statistical study we will not tell us how the independent variables translated into specifics outcomes.
We are not interested in the process of upgrading per se but rather on how the different processes that
leads to upgrading can be transformed in conditional generalizations to guide public policies that leads
to upgrading. And last, the small-N analysis and the use of process tracing makes possible to work with
deviant cases and do “contingent generalizations,” when the theory identifies the conditions under
which alternative outcomes occur (see George and Bennett 2005 ch. 12). In fact, contrary to the
statistical approach that does not look carefully at deviant cases, these cases in small-N analysis are
important and even leads to the formulation of new hypotheses linked to economic and social
upgrading. Therefore, small-N research and within-case analysis seems to be the most appropriate
methodology for this research.
In order to do this research, we will make use of the large literature on global value chains to develop
hypotheses, conduct interviews with business associations, small and medium coffee growers in the
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selected countries, international traders and government representatives in each one of the four
countries. In addition, we also intend to interview global buyers (branded manufactures) in some
developed countries and large retailers as well to see how their procurement policies and market
strategies affect coffee growers in developing countries.
5. BIBLIOGRAPHY
Fitter, R. and R. Kaplinksy. 2001. Who Gains from Product Rents as the Coffee Market Becomes More
Differentiated? A Value-Chain Analysis. IDS Bulletin 32, no. 3: 69-82.
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Gereffi, G. 1994. “The Organization of Buyer-Driven Global Commodity Chains: How U.S. Retailers
Shape Overseas Production Networks.” In Commodity Chains and Global Capitalism, edited by
G. Gereffi and M. Korzeniewicz. Westport: Greenwood Press.
Humphrey, J. and H. Schmitz 2002. "How Does Insertion in Global Value Chains Affect Upgrading in
Industrial Clusters?" Regional Studies. 36(9): 1017-1027.
Lieberson, S. 1992. “Small N's and Big Conclusions: an Examination of the Reasoning in Comparative
Studies Based on a Small Number of Cases.” Pp. 105-118 in What Is A Case: Exploring the
Foundations of Social Inquiry, edited by C. C. Ragin and H. S. Becker. Cambridge: Cambridge
University Press.
Mahoney, J. 2000. "Strategies of Casual Inference in Small-N Analysis." Sociological Methods &
Research 28(4): 387-424.
Mahoney, J. and D. Rueschemeyer 2003. Comparative Historical Analysis in the Social Sciences.
Cambridge, U.K. ; New York: Cambridge University Press.
O’Brien, C. 2002 Report on Fair Trade trends in the US, Canada. Washington, DC: Fair Trade
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