Shifting regimes of governance in the coffee market: From secular crisis to a new equilibrium?

Abstract

This paper employs a global value chains (GVC) perspective to recent developments in the coffee market, associated with the behavior of market structure in a context of widening spreads around declining prices and affirms that due to their imperfect inclusion in the global economy, primary markets have entered ‘terminal crisis’. The paper asserts that while the role of state-territorial regimes of governance has noticeably weakened in the current (‘terminal crisis’) context, the combined strategic positioning of (‘related’) players, residing at highly imperfect, monopolized nodes has become the key shaper of development and this has had a de-stabilizing effect on the poorest. The paper observes that systemic crisis appears to be resolvable, subject to the ability of emerging new redistributive outcomes to reposition the coffee system at a qualitatively new equilibrium. In contributing to a more systematic (value-chain centered) line of enquiry on the relationship between development and inequality, the paper analytically expands key relationships in the GVC framework (using extra inputs from strategic management, economic trade and convention theory) and offers to policymaking a framework for ‘combating’ falling terms of trade in primary markets by means of new economic relations.

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