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Institutions, the governance of quality and on-farm value retention for Indonesian specialty coffee

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Fluctuating global commodity prices affect the livelihoods of millions of tropical farmers worldwide. In recent years, systemic oversupply of many tropical agricultural products, grown in countries such as Indonesia, has meant that agricultural incomes have continuously fallen below subsistence levels. Within an increasingly open global trade regime, along with the limited ability of governments to protect domestic farm prices, quality-informed product differentiation appears to offer an escape route from the trap of low commodity prices. However, ownership and governance of quality constructions are fundamental to determining who benefits from such differentiation. This paper examines the use of geographical identities as a specific tool for value-adding in agricultural produce, presenting the case of specialty coffee production in South Sulawesi, Indonesia. The potential for producer-driven geographical indications compete with corporate-driven quality constructions, where the latter are able to appropriate place-related quality associations by using trademarks, vertical integration and tightly coordinated supply chain controls. An emergent politic of quality governance and ownership in global commodity chains reveals the highly restricted institutional terrain within which growers of specialty coffee might attempt to retain a higher share of the economic rent associated with quality production.

Keywords: Indonesia; coffee; geographical indication; global commodity chains; institutions; quality governance

Document Type: Research Article


Publication date: July 1, 2007


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