This project addresses actors and institutional environments related to the production and trade of agro-commodities at local and national scale and links this to questions of global markets and their determinants. It considers an important agro-commodity – coffee – grown in rural highlands of some of the “Joint Areas of Case Studies” (JACS) of the NCCR North-South, and demand, trade and value addition usually driven by actors in the North. Thus, not only highland-lowland interdependencies, but also North-South and centre-periphery relations are considered.

Coffee plays a crucial role in the livelihoods of millions of households in developing countries. Small-scale farmers produce over 75% of the world’s coffee. Changing patterns in the global coffee chain and oversupply has resulted in coffee prices falling to their lowest levels in a century. Coffee price decline and volatility have negative macro-economic impacts and result in declining export revenues reducing the ability of the state to invest in rural development, lead to increased poverty in coffee producing areas, declining labour standards, and unsustainable land use and land management strategies.

While the market for (undifferentiated) commodity coffee has stagnated, the growth of the speciality market has created new opportunities for small-scale producers. A key characteristic of speciality markets is that they pay higher and usually more stable prices and provide additional benefits to participating farmers. For producers, the overall income impact depends on the balance between the extra costs of matching the requirements of the standards, in comparison to the extra income earned from the premium.