Global Private Regulation and Value-Chain Restructuring in Indonesian Smallholder Coffee Systems

Summary Consumer concerns over the environmental and social conditions of coffee production have led to the proliferation of sustainability codes, certification schemes, and labeling claims in the sector. This paper addresses how the global private regulation of ethical and environmental standards is having several implications for value chain structures and institutions in the smallholder coffee systems of Indonesia. Global private regulation is driving structural changes in modes of farmer organization, trader-farmer relationships, and is resulting in the increased upstream penetration of multinational trading companies into coffee-producing areas across Indonesia. An unintended consequence of these changes in the future may be to increase transaction costs along the value chain and to exert an overall downward pressure on farm-gate prices.