Assessing the institutionalization of private sustainability governance in a changing coffee sector

Abstract

The potential of transnational private governance initiatives to constitute effective alternatives to state‐led regulation of global value chains rests on their ability to scale up and become institutionalized in a given sector. This study examines whether such institutionalization has occurred in the coffee sector, the commodity with the most widespread adoption of certified products and over 30 years’ experience of private governance, and tests hypotheses on facilitating and inhibiting conditions. It finds that while norm generation around responsible supply chain management and the organizational institutionalization of standard‐setting bodies is well advanced, the practice of internalizing social and environmental externalities through the routinized production and purchase of higher priced certified goods continues to be questioned by industry actors. Indeed, conditions that favored normative and organizational institutionalization, such as high levels of industry concentration, product differentiation, and deliberative interaction, are shown to represent barriers to the practice‐oriented institutionalization of market‐driven regulatory governance.

The domestic political economy of upgrading in global value chains: how politics shapes pathways for upgrading in Rwanda’s coffee sector*

“…The variety of relationships between producers, traders and roasters within the coffee GVC/GPN may suggest the existence of 'limited governance' (Fitter & Kaplinsky, 2001) or 'multipolar governance' (Ponte & Sturgeon, 2014). However, Grabs (2018) has recently shown that roasters and retailers like Nestle and Starbucks have begun rolling out their own certification schemes, leading to sustainability initiative adapting their strategies towards roasters and retailers from one of confrontation to competition. Though there remain numerous stakeholders occupying governance roles within the coffee GVC/GPN, there is a global tendency towards buyer-driven governance.…”

China and the changing economic geography of coffee value chains

“…In 2018, the institutional settings of the global value chain for coffee are characterized by limited state intervention, but with an expanding system of private regulation by both corporate firms and NGOs. This is most notable through the expansion of various sustainability programs orchestrated along the value chain between consumers and producers (Jaffee, ; Panhuysen & Pierrot, ; Levy et al ., ; Grabs, ). Low world coffee prices (especially during the period 2000 to 2004) led to widespread reports of extreme poverty in coffee‐growing communities and what was identified as a ‘global coffee crisis’ (Osorio, ; Vega et al ., ; Bacon, ; Daviron & Ponte, ).…”

“…Various applications of a GVC or global commodity chain (GCC) approach to the coffee industry over the last few decades (inter alia Talbot, ; Talbot, ; Ponte, ; Talbot, ; Daviron & Ponte, ; Neilson, ; Neilson & Pritchard, ; Grabs, ) have consistently identified a range of characteristic chain dynamics. The fundamental geography of coffee production and trade has, until very recently, remained largely consistent with earlier colonial patterns.…”

“…This deregulation event facilitated the rise and consolidation of the power of transnational coffee companies—primarily coffee manufacturers, also known as roasters—as capable of effectively governing the chain (Ponte, ). Grabs () estimated that eight such manufacturers (Nestlé, Jacobs Douwe Egberts, Green Mountain, JM Smuckers, Strauss, Starbucks, Tchibo, Lavazza) held a 53 per cent share of the global coffee retail market in 2014. From their headquarters in the Global North, these manufacturers are quintessential lead firms, ultimately responsible for governing supply chains back to rural producers in the Global South.…”

“…Despite a reasonable degree of concentration and recent acquisitions (Grabs, ), many smaller specialty roasters persist (in both established and in new emerging markets), and these could also be functionally considered lead firms in their own right due to their role in chain governance. Manufacturers, moreover, tend to rely on large commodity traders to supply them with green beans.…”