The analysis of the coffee chain is particularly important in understanding the political economy of development for a variety of reasons. First, over 90% of coffee production takes place in developing countries, while consumption happens mainly in industrialized economies. Therefore, the production–consumption pattern provides insights on North–South relations. Second, for most of the post‐WWII period coffee has been the second most valuable traded commodity after oil. Third, attempts to control the international coffee trade have been taking place since the beginning of the 20th century, making coffee one of the first ‘‘regulated’’ commodities. Fourth, a number of developing countries, even those with a low share of the global export market, rely on coffee for a high proportion of their export earnings. Coffee is a source of livelihoods for millions of smallholders and farm workers worldwide. Fifth, producing country governments have historically treated coffee as a ‘‘strategic’’ commodity, they have either directly controlled domestic marketing and quality control operations or have strictly regulated them––at least until market liberalization took place in the 1980s and 1990s.
Indonesia, as one of developing country, is currently the fourth largest producer of coffee in the world. Indonesia produced 420,000 metric tons of coffee in 2007. Of this total, 271,000 tons were exported and 148,000 tons were consumed domestically. Of the exports, 25% are Coffea arabica and the balance is Coffea canephora. With the embodied statistical record, it is a big deal for Indonesia to assess what the coffee study has to say about the role of commodity trade in development and provides everal policy options to address the emerging imbalances in the global coffee chain due to limited upgrading and added‐value measurement.
Lack of value added becomes an important factor that must be considered in developing the potential of Indonesian coffee exports. Despite being the fourth largest producer in the world, the value of exports is very small when compared with benefits of coffee exporting countries of Indonesia. There is a significant price difference between imported coffee beans and a cup of coffee that available at the cafe or coffee bar. Majority of Indonesian coffee is sold in the form of raw materials and unprocessed. In coffee exporting countries, the United States for example, sells a variety of coffee products (such as Latte), and backed by good marketing and branding. This must be the main points that are important to consider in order increasing domestic profits of the coffee trade.
Associated with the global coffee chain analysis, the Global Commodity Chain (GCC) approach was developed by Gereffi and others within a political economy of development perspective. In this body of work, the international structure of production, trade, and consumption of commodities is disaggregated into stages that are embedded in a network of activities controlled by firms and enterprises. The systematic study of commodity chains seeks to explain the spatial organization of production, trade and consumption of the globalized world economy (Gereffi, Korzeniewicz, & Korzeniewicz, 1994, p. 2). A commodity chain in this context is seen as ‘‘a network of labor and production processes whose result is a finished commodity’’ (Hopkins & Wallerstein, 1986, p. 159). Specific processes within a commodity chain are represented as ‘‘nodes’’ linked together in networks. Therefore, we can see a commodity chain as ‘‘a set of interorganizational networks clustered around one commodity or product’’ (Gereffi et al., 1994, p. 3), in which networks are situationally specific, socially constructed, and locally integrated.
In this theoretical framework, as a developing country, increasing the added value in the coffee chain as an export commodity is a necessary option for Indonesia. Not just in producing, but also in distributing sector. Adding value to green coffee in the producing country is not an easy option but it is worth to do. It entails promoting quality improvement, raising the reputation of an origin, and requires good marketing skills. The key for would‐be producers of high quality coffees is to know how to sell the right coffee to the right people. They need to know which quality characteristics are appreciated where, what kind of premium will be paid, and what are the motivations that are needed for consumers to take a product seriously. Selling a ‘story’ is particularly important. Small estates and/or cooperatives could be helped to be better at exploiting their ‘stories’ than they do at present. This requires access to information and marketing skills. In addition, café and speciality coffee chains have been re‐commoditising ‘consumption experiences’ and simplifying supply strategies.
Pemakalah: Rafiazka Millanida Hilman
Disadur oleh: Tika Marzaman
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