Coffee, Cooperation and Competition: A Comparative Study of Colombia and Vietnam Authors: 1 Adriana Roldán-Pérez Maria-Alejandra Gonzalez-Perez Pham Thu Huong Dao Ngoc Tien Research assistants (Colombia): Franz Xaver Riegler Stephanie Riegler Catalina Tabares Melissa Eusse Research assistant (Vietnam): Nguyen Thu Hang 1 Acknowledgements: Funding: Universidad EAFIT, Colombia Foreign Trade University (FTU), Vietnam United Nations Conference on Trade and Development (UNCTAD) Institutional Affiliation: Department of International Business at Universidad EAFIT (Colombia) Foreign Trade University (FTU) (Vietnam) Other: Eamonn McDonagh and Ignacio Mastroleo Joseph Clements (UNCTAD) Ralf Krueger (UNCTAD) Table of contents List of figures .............................................................................................................. 4 List of tables ................................................................................................................ 4 Acronyms, abbreviations and definitions ................................................................... 6 Weights and measures ................................................................................................ 6 Abstract ....................................................................................................................... 7 1 Introduction ............................................................................................................. 8 1.1 Research objectives ....................................................................................................... 9 1.1.1 General objectives .................................................................................................... 9 1.1.2 Specific objectives ................................................................................................... 9 1.2 Research methodology .................................................................................................. 9 2 Literature review on the global value chain (GVC) of coffee ............................... 11 2.1 Theory of global value chains ..................................................................................... 11 2.1.1 Introduction to the value chain concept .................................................................. 11 2.1.2 Global commodity chains ....................................................................................... 12 2.1.3 Value chain analysis............................................................................................... 13 2.1.3.1 Definition .................................................................................................................... 13 2.1.3.2 Methodological aspects of value chain analysis ............................................................ 15 2.1.4 Governance ............................................................................................................ 15 2.1.5 Barriers to entry and rent ........................................................................................ 16 2.1.6 Upgrading in value chains ...................................................................................... 16 2.2 Overview of the world coffee market ......................................................................... 17 2.2.1 World coffee production ........................................................................................ 17 2.2.2 Production by type of coffee .................................................................................. 18 2.2.3 Coffee producing countries .................................................................................... 19 2.2.4 Stocks in producing countries ................................................................................. 20 2.2.5 World coffee exports .............................................................................................. 21 2.2.6 World coffee consumption ..................................................................................... 24 2.2.7 The International Coffee Organisation and coffee prices ......................................... 29 2.2.8 Mapping the global value chain of coffee ............................................................... 31 3 Analysis of Colombia and Vietnam’s participation in the coffee value chain...... 33 3.1 Vietnam’s participation in the GVC of coffee ............................................................ 33 3.1.1 Background ........................................................................................................... 33 3.1.1.1 Natural conditions ....................................................................................................... 33 3.1.1.2 Infrastructure ............................................................................................................... 34 3.1.1.3 Policy and legal frameworks ........................................................................................ 35 3.1.2 Vietnam’s position in the global coffee market ....................................................... 36 3.1.2.1 Export output .............................................................................................................. 37 3.1.2.2 Export turnover ........................................................................................................... 37 3.1.2.3 Export product structure .............................................................................................. 38 3.1.2.4 Export prices ............................................................................................................... 39 3.1.2.5 Export markets ............................................................................................................ 40 3.1.3 Actors .................................................................................................................... 42 3.1.3.1 Farmers ....................................................................................................................... 42 3.1.3.2 Middlemen .................................................................................................................. 43 3.1.3.3 Processing or exporting companies .............................................................................. 44 3.1.3.4 Vietnam’s instant coffee market ................................................................................... 44 3.1.3.5 Other players ............................................................................................................... 45 3.1.3.5.1 The Vietnam Coffee and Cocoa Association ......................................................... 45 2 3.1.3.5.2 Buon Ma Thuot Coffee Exchange Centre .............................................................. 46 3.1.4 Case studies of coffee companies in Vietnam ......................................................... 46 3.1.4.1 Case study one: Vinacafe Buon Ma Thuot .................................................................... 46 3.1.4.2 Case study two: Phuong Vy Coffee Company .............................................................. 50 3.2 Colombia’s participation in the GVC of coffee .......................................................... 53 3.2.1 Colombia’s coffee industry .................................................................................... 53 3.2.1.1 Natural conditions ....................................................................................................... 53 3.2.1.2 Infrastructure ............................................................................................................... 54 3.2.1.3 Regulatory framework ................................................................................................. 56 3.2.2 Position in international markets ............................................................................ 56 3.2.2.1 Coffee production ........................................................................................................ 56 3.2.2.2 Coffee exports ............................................................................................................. 58 3.2.2.3 Domestic coffee consumption ...................................................................................... 59 3.2.2.4 Actors ......................................................................................................................... 60 3.2.2.4.1 Coffee growers..................................................................................................... 60 3.2.2.4.2 National Federation of Coffee Growers of Colombia............................................. 61 3.2.2.4.3 Coffee processors ................................................................................................. 61 3.2.2.4.4 Coffee exporters ................................................................................................... 62 3.2.2.4.5 The state .............................................................................................................. 63 3.2.3 Internationalisation and market innovation ............................................................. 64 3.2.4 Case studies of coffee companies in Colombia ....................................................... 66 3.2.4.1 Case study one: National Federation of Coffee Growers ............................................... 66 3.2.4.2 Case study two: Colcafé S.A. ....................................................................................... 67 3.2.5 Colombia’s participation in the GVC of coffee ......................................................