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Value chain analysis and market power in the commodity processing with application to the cocoa and coffee sectors

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  • Christopher L. Gilbert

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    Abstract

    Value chain analysis extends traditional supply chain analysis by locating values to each stage of the chain. This can result in a “cake division” fallacy in which value at one stage is seen as being at the expense of value at another. Over the past three decades, the coffee and cocoa industries have witnessed dramatic falls in the producer (i.e. farmer) share in rental price. Both industries are highly concentrated at the processing stage. Nevertheless, developments in the producer and retail markets are largely unconnected and there is no evidence the falls in the producer share are the result of exercise of monopoly-monopsony power. The explanation of declining producer shares is more straightforward – processing, marketing and distribution costs, incurred in consuming countries have tended to increase over time while production costs at the origin have declined.

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    Bibliographic Info

    Paper provided by Department of Economics, University of Trento, Italia in its series Department of Economics Working Papers with number 0605.

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    Date of creation: 2006
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    Handle: RePEc:trn:utwpde:0605

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    Cited by:
    1. Joni Valkila & Pertti Haaparanta & Niina Niemi, 2010. "Empowering Coffee Traders? The Coffee Value Chain from Nicaraguan Fair Trade Farmers to Finnish Consumers," Journal of Business Ethics, Springer, vol. 97(2), pages 257-270, December.

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