Coe Ni, Ker, &. ug (2942): ECONOMIC Geoakrarny / “eure, 4 CHAPTER 8 COMMODITY CHAINS Where does your breakfast come from? Goals of this chapter ities for, and limitations of, different ways of orga- sizing and regulating commodity chains 8.1 Introduction228 ORGANIZING ECONOMIC SPACE ngs, beef paties, buns, coffee, and pancakes with maple syrup and butter, the final sequence ofthe video features the little gil asking her parents the even more hing about this McDos fas this chapeer, but parents, while very familiar with MeDonald’s meals, seem ro know ‘nothing a all about the origins of their breakfast and so resoreo telling fctio s dairy products are typically supplied by global food companies such as Kraft or Dean Foods. The coffee comes from Gavifia Gourmet Coffee, which sources the beans from Central and South America. , made mostly from USS. beef and a small ‘into 2 McDonald's hot breakfast? Many fr within the same country, but other not. Many will have traveled tens of thousands Knowing where your breakfast comes from can mi ems of both health and ethical concer others are distributed globally by cans example, Smucker’ strawhecry jam (by J-M. Smucke Maid orange juice (by Coca-Cola), and Pike Place™ Roast ands and theix geographical origins appear complicated then the challenge is even greater when it comes to the generic ands sold by retailers such as Wal-Mart or Tesco. the complex journeys taken by such simple com- ‘our breakfast foodstults across the global economy? In chs chapter, 1 the notion of commodity chains a a way of understanding the con” nections and interdependencies between different workers, consumers, rms, and institutions involved in commodity stories. In following the travels of different commodities, our focus is on the geographies and governance of connections within che global economy and the normative dimensions of those interdepen- ddencies such as standards and regulations. There are four main secrions in the ‘chaprer. First, we consider how capitalism as a system hides the connections oF ns through standards initiatives of various kinds regulation of commodity COMMODITY CHAINS. 205 ‘that seek to improve various aspects of production conditions along the chain (Section 8.4), Fourth, we explore the potential interconnections herween diferent ‘commodity chains and, in particular, how waste products may be used as starting points for new commodity chains (Section 8.5). Where individual commodity ‘chains begin and end is perhaps not as obvious 2s it rst appears. 8.2 Capitalism, Commodities, and Consumers Asexplained in Chapter 3, capitalism can be thought of a a commodity exchange ‘A commodity is simply something useful that enters the macket and is ble for purchase ata price. However, commodities are much more than just ‘material chings suchas books or food. Inthe contemporary world, more and more areas of our everyday life have become caught up in processes of commodification (see also Chapter 5 om nature). Domains a8 varied as culture (eg, music, museums, and galleris), religion (@.., celebrity preachers), knowledge (e.g, MBAs and incelleceusl property rights), the environment (e.g. carbon credits) tons) and the human body (eg, trade in become commoditized and thus subject to the vagaries of the ma ‘While commodities are central to the capitalis system, atthe same time they ‘ay serve to hide important dimensions of how they ace produced and brought tous. The exchange value of a commodity ~ the price ~ is often indicative of how the commodity was czea sds on that wee regued, an th pos exacted ti Droces. And ye the simple pace fog tel reveal noting proces the commodity hat wndegone and te necosary tcl cots ten “ene ths podon te commode! sont A "sul consumer inthe caption ae lanely gore o he seeped crgns an hors of he commodities tat he consume. The pach of commodity though money rations ae ao Chapter) sre deconec ‘roincrs and consumes encooaging an asian of respi on te Pat of consumers forthe ers ad conion ander whch te commody as made. The consumer can sinply bottom te ie waue of whee toy hve purchased ~ at ithe seuss of pura produ oan nde Ths pose profound chal wae know the Bist and geoprap ensue, and comnomi eogrphes ho wan imeedependencis thin the lobal economy MeDonal’s Bi Bree oc drinking coer in wake the consumes comps, albeit wnkowngy in many casein somes nts of connections aero he lobes Bow 81)228 ORGANIZING ECONOMIC SPACE CASE STUDY Rox 8.1 Coffee, Cafés, and Connections et eenters in Toronto (Can: jong Kong (Asia Paci (China), a farmer support center in San Jose (Costa Rica), and eh retail stores worldwide. As of January ‘owned oF licensed stores inthe United St ‘than 50 countries, and was serving millions of customers each day, The sompany offers a range of over 30 coffees and teas is addition to wide variety of snacks and other beverages. Through its marketing and store information strategies, Starbucks endeavors to create 3 ” culture of coffee drinking in its cafés, The corporate web has an extensive Cotfee Education arca, several pages of which descr and contrast che coffees from Latin America, Africa, and Sontheast Asia under the heading The Flavors ins Your ‘coffee with the motto, “Geography Isa Fla individual coffees are described in evoca Be pe eat eegel eae iee wea ‘kinds of knowledge shout coffee asa commodity with a particular history and geoaraphy. "However, tis possible co offera more erica reading ofthis sophisucated avarketing sratexy, The ino oer in Starck presents a Panial interpretation of colle a been one of rising prod prices, and asa result, increasingly ‘arginal working ans for millions of farmers and farm ‘workers in a range of poe tropical countries, many of which are bighly ‘COMMODITY CHAINS. ar dependent on coffee exporcs (which make up ove 50% of Ethiopia's total exports for example). Over the same (such as Nestle and Kraft) aud ret global industry have been able co their coffee products. In short, romanticized reading of the gl swwrw.starbucks.com, Moreover, the images we receive about commodities in our everyday life may actively serve to further conceal or even misrepresent the origins and social Chapter 11 There does breakfa ing the ral origins of creation of various images, adverrisers seek co establish time- and place-specific ‘meanings for particular goods and services that may be afar exy from the realities of their production. Thiak, for example, of advertisements for go jevelry in piceures and words, sassion, romance, commitment, and s0 on for an engaging attempt to de central messages, see www.2dbuster.org). in South Africa's gold mines, and women left behind in Lesotho working long hours fr negligible payin the tent industry and abandoned women working in unregulated factories. alized, and gendered relations are all part and parcel of the very commodity displayed on the windows of leading ewelcy retails. Cariously, in some cases, paces of orgis are constructed in certain ways co make the products more appealing and positive. Many upmarket consumers are willing to pay more for products made in places well knowa to th watches, Italian clothing, French wines, Belgian chocolates, German cars, and228 ORGANIZING ECONOMIC SPACE Japanese digital cameras. Product packaging often displays images and labels that give 3 of origin. For instance coffee beans indane and everyday acts of consump Commodities, then, need to be thought of as much more than jus 135 representative people char have enabled the consumer to make a purchase. In this way, the working conditions and gender relations that underlie commodity production —and that may be let certain consumers - can be revealed, challenged, and, event improved (see also Chapter 15}. In the contemporary era, ths is increasing about revealing interdependencies at the global scale, even in the case of relatively perishable foodstus. COMMODITY CHAINS 229 Che Agen, wth permeion Figure 8.2 Geography isa davor 8.3. Linking Producers and Consumers: ‘The Commodity Chain Approach How then do we bring together all che diverse actors involved inthe global travels of orange juice or 2 T-shirt? The notion of the commodity ar production chain ems. Figure 8.3 outlines a much simplified ‘commodity chain for our daily breakfast, illustrating the eransformation of initial raw materials into final outputs in the form of consumable foodstufs. These outputs ae then brought co igh such services as logistics and retailing. In ‘more complex ways, this transformation includes core activities (eg., production, ery, and services) and support act merchandising, 1e, human resoure: ‘The commodity Figure 83 1 Doug Bey230 ORGANIZING ECONOMIC SPACE manufacturing processes: many of the inputs ‘commodities produced will ake the form of le phone) or corporate activities and Jhion, with each stage in question. {ncerfirm relationships are linked toget adding value tothe process of production ofthe goods ‘Coffee a recurrent ier in many breakfasts chapter offers a good example of such a commodi geographies of coffee beans explained in Box 8.1 ‘market value (price traded) of a bag of coffee beans ‘and profits encountered by various producers and i that very substantial differences inthe value derived from this commodity chain of roasted beans. Mor , roasters capture about 30% Qéded in the coffee commodity chain, while retailers (22%) and international traders such as Neumann, Volcafe, Cargill, and others ~ also do well (8%). ‘The sesul is that at least 60% of the economic value derived from coffee goes to developed-country fins, although some estimates pur the figure as high as 180%. How do we make sense of these enormous differences in value creation and capture along the commodity chain? Who holds the most power in this chain sind how ist governed? What kinds of standards ace imposed to ensure a certain degree of conformity and consistency in these commodities? Understanding the sequence and range of actors invol commodity chain, sometimes known as its input-output structure first step toward developing @ good understanding of comm« production processes. However, there are three further important dimensions to Eh commodicy chains that we will now consider in turn: their geography; the way in which they are coordinated and contelle their governance; and the ‘way in which local, national, and intemational conditions and policies shape the ‘various elements in the chain ~ cher institutional frameworks. Geographical Structures In very simple terms, the geography of 2 commodity chain can range from being concentrated in one particular place to being widely dispersed across a wide range scussion of breakfast commodities makes vividly cleat, smmodity chain in the contemporary global economy just seen in the sourcing of being together an ie of international connections. Global commodity chains, a5 they hi ‘be called, are one of the primary organizational features of the wor my (Gereffi, 1994). This geographical reac is impor- ‘ant aot only because it determines precisely which actors are connected together COMMODITY CHAINS 231 Prices traded (USS/Kg) Costs and margins (USS/ka) {9.26 pce fee cote aning ‘ie pone mKampas 3045 xp pre for Stat ‘ride onu one 152 Imoon pe for Standard ‘isc oem soe 526.50 eta price for arerage Ig of cue ne UK232 ‘ORGANIZING ECONOMIC SPACE ‘COMMODITY CHAINS. 23 across the global economy, but also in revealing the unequal geographical dsti- fits, beeweea different KEY CONCEPT Box 8.2 Upgrading strategies in global commodity chains ructures of commodity chains in dynamic requalty engendered theough th eB Beets wes "We can make five further points about the geographical struct to distinguish between four different types of upgrading (Humphrey and ‘Schmitz, 2004): + Process upgrading: Improving the efficiency of the production sytem by citer ceorganizing the production proces or introducing superior technologies. For example, acac manufacturer might introduce robot technology ro speedup its assembly ines. ‘© Productupgrading: Moving into making more sophisticated products or services. For example, abasic food processing fm might star making prepared frozen meals, oF 2 Saancial fm might offer new kinds of insurance products. + Finctonal upgrading: Acquiting new roles in the chain (andor aban doning existing functions) in order to increase the overl skill content and level of “value added” ofthe activites undertaken. An electronics ‘manufacturer, forexample, might move from simple assembly to orginal ‘equipment manufacturing (OEM) 1 own-brand manufacturing (0% © Inversectorl upgrading: Us chain to move ino diferent sectors. For example, a firm might seis experience of making televisions to enable it to move into computer ‘monitor making At the level ofthe indivi ces upgrading strategies can transform forces, The T deyeloped from a clothing poring Germany's Hugo Boss hing brand and cter troughs Ma jeans produgs acosfl upgrading ay bebind the emergence ofthe oewly {see also Chapter 4). The Taiwanese electronics industry, for example, has bbenefred from all four kinds of upgrading processes to develop from 1 base for foreign-owned electronics assembly into one of the world’s leading centers for designing and producing new computer technologies developing countries, facilitating remains a key policy concern, a8 spoils of global commodity chains in the global economy. For many upgrading across a wide ra they seek to gain a grearer share for clusters of local firms.COMMODITY CHAINS. IZING ECONOMIC SPACE Producerctiven commodty chains know-how developments, The au try provides an excellent example ofthis kind of producee-driven cha lirerally thousands of subsidiaries and tiers of subc the world, as well a extensive global systems of di establishing and controling the global production systems of usually ocated in export-oriented developing world counties (s ‘These rerailers and but also through theie abil ‘products and markets, and to exert236 ‘ORGANIZING ECONOMIC SPACE thar buyers in these chains are nor final consumers, but tnd wholesalers who bring these commodities ro final ‘commodity chain is common in labor-intensive consumer goods sectors, such 4s clothing, footwear, toys, and handicrafts, Production is generally carried out through multi-tiered layers of subcontractors and suppliers that make finished Profits in these chains experts, allowing the with the main consumer markets. Hence control is enacted through the ability ‘shape mass consumption patterns through strong brand demand through sourcing strategies from their gs the example af the coffee value chain and Starbucks commodity chains are aed by buyers who have the power and capacity to dictate the production terms and even standards of their supplers/produces, 'We can use the case of clothing to appreciate more fully the role of these large buyers such as Wal-Mart and Nike can achieve buge ‘global sourcing of closhing manufactured in developing “sweatshops can be traced back to the Industrial Revol tions today are a consequence of the emergence of these ing the 1990s, Wal-Mare and Nike ‘and the mainstream media for their and Southeast Asia where sweatshop the geographical and organizational loping counties, ly valuable windows for us to understand gender relations along the entire commodity chain, from designer clothing targeting young and affluent female consumers to mass production employing tens of thousands of female workers, COMMODITY CHAINS 2 Table 8.1. Characteristics of producer-driven and buyer-deven chains Form of Esonomic Governance oases Bamples” Source: Adapted from Kesler and Applebaum (1998) ‘To sum up briefly, the distinction between producer- and buyerdriven com: modity chains is a usefal frst step toward understanding commodity chain ‘governance. We summarize and contrast the basie characteristics of producer land buyer-deiven commodity chains in Table 8.1 In reality however, governance is far more vaciable both within and betvten diferent economic sectors. Eq. be coordinated by either 2 large manufacturer ‘manufacrarers and ‘organizational and cated global commodity chains. In th new forms of infomediaries wich exten {such as Google and AOL} may play a ¢lobal production activity (Other logistical and supply chain service providers are also playing increas- ig the global reach of commodity chains. One sed Li &¢ Fung Group, which offers a powerful and logistics services to is clients. In 2010, the 40 countries employ- ing 27,000 staff and coordinating a sourcing network of over 15,000 suppliers (wrwwlifung.com, accessed March 8, 2012). While Li & Fung isa broadly based wading, distribution, and retail group, th is accounted for by its export ich manages the entire supply chain for global brands (e-¢., Disney, Levi Strauss, and Reebok) and ingly important role in mediating238 ORGANIZING ECONOMIC SPACE CASE STUDY Box 8.3 Trading giants the Japanese Sogo Shosha “The Japancte sogo shosha provide a fascinating example of the importance of logistics and distribution companies in he global economy. Sogo sbosba ‘eanslates directly from the Japanese as "general trading company,” but this does not really do justice to the range of functions chey perform. The {ogo shosha have long played an important role in the Japanese economy. During the 1960s, they were the frst Japanese firms to venture overseas, ‘acting as global marketing end incelligencegathering networks and thereby facilcating subsequent trade and Japanese foreign direct investment. The seven leading sogo shosha - Marubeni, Mitsui, Misubshi, Itochu, Nissho- Iwai Nichimen, Sumitomo, and Tomen -are now massive commercial, financial, and industrial conglomerates. They each operate huge networks ofsubsidiaries and afistes across the global economy. In 2008, Mitsubishi registered profits of USS4.9 billion on total sales of US$240 billion across 5500 affiliates, ranging from an aluminum smelrer in Mozambique to the Kentucky Fried Chicken franchise in Japan In the same year, Mitsu ran 4154 offices across 67 countries, had 98 overseas trading subsidiaries, and ‘employed almost 40,000 staff, In 2009, the combined annual sales of these ‘tading companies reached US$83S billion, about a sixth of Japan’s GDP {www bloomberg.com, accessed on March ). Fach of these firms handles tens of thousands of differene products. More specifically, they perform four specific functions (Dicken, 2011): “Trading intermediation: Matching buyers and sellers in Tong.term con: teactual relationships © Financial intermediation: Serving as a botier between buyers and sup pliers «Information gathering: Gathering and synthesizing information of mat- ‘ket conditions around the world Organization and coordination of complex business systems: As seen in the cate of large infrastructore projects ‘The role of the Sogo shosha has ehanged in several important ways lover the past rwo decades. Fist, ther share of Japanese eade has fallen Substantially in 1991 they acouated for almost 60% of Japan's imports ‘and 50% of expors, while by 2002 these figures had dropped to 22% and 12%, respectively. In pact eee change reflct how Japan's man: facturing compaies have established their own marketing and sales COMMODITY CHAINS. 239 1s design and production backend tasks of240 ‘ORGANIZING ECONOMIC SPACE telationships berween Kenyan farmers and exporters, and U.K-based importers fad wade, wholesalers, and reales. However, a8 U.K. supermarkets such 25 ‘Tesco, Sainsbury's, and Asda have grown in size and expanded their market share, chey have started to control and coordinate more directly the commodity ‘chain, In onder (0 attract customers, the supermarkets have intcoduced new ‘aries of fesh goods, placed heavy emphasis on quality, provided year-round fupply, and increased the processing of products so they require litle oF no preparation before cooking. As a result, instead of buying vegetables ehrough ‘wholesale markets, chey have developed closer, non-market-based relationships with UK. imporcers. By the mid-1990s, a relational governance system had femerged in which the supermarkets work directy with a limited number of UK. importers with whom they have established long-term re importers have moved beyond a rading role, offering a range of service including processing and handling, monitoring quality, finding new sources of supply, and Supporting African producers and assessing their performance. The governance fof a commodity chain should always be seen in dynamic terms, however. Over time, che previously buyer-driven celationships beoween importers and Kenyan texpocters are also becoming more celational as the capabilities ofthe exporters {grow and they are abl o take on more processing ofthe produce. Institutional Contexts ‘Commodity chain governance, then, i 2 highly dynamic afta. Is nature does not depend only on the sector of industry in question, but also on the precise array ‘of places that are connected together by the chain. This is because every point i shaped by, the institutional context in which it to the enteepreneurial and politcal cultures of particular places. Seco ‘at differen patil scales. Atthe subnational scale, local and regional governments ‘may implement a range of policies to ry and promote certain kinds of economic evelopment in the locality (euch as tax holidays for firms that undertake mote research and development, and minimum wage legislation ro protect local accessed on March 8, 2012}. COMMODITY CHAINS. 241mo ORGANIZING ECONOMIC SPACE Figure 8.7_ The top swelv coffe producing (expors) and consuming (imports) counsies, 2009, ‘Sowce: Adapted from Data from wave c.g acted Spm 2, 2010 since creating an oversupply inthe global market and purting severe downward pressure on peices. “The ending of the ICA regime has dramatically altered the balance of power in the coffee commodity chain, asthe now liberalized, market-based coe’ trade bargaining power has been concentrated in the hands of consuming-country firms, andin particular a small group of brand-oame roasters and instant coffee ‘Consuming Countries Producing Countries [igure 8.8 The coffee commodity chain: the changing instiutional framework Sourc: Adapted rom Poa, (2002) The ase revolution’? Regalaton, muses and cootampion 30, 1 1 enforce quota and price contzols provisions in pre-1989 ICAs and has become ‘merely a forum for promoting market-enhancing coe policies and consumption. Its latest 2007 ICA states, for example, that ICO members recognize the market distorting measures that may binder the increase in coffee consumption. from the coffee chain that is retained in the developed markers has gone up fromthe global commodity chain (Figur syer=grower ‘now essentially “armi-lengsh” market connections, with prices rernational commodity markets such as the New York Board of coarput structure (e countries), geographical scructure (e.g, the rapid growth of produ producing counties such as Viemam), and governance (eg. the accumulation of conditions of their workings. chains can enable us to change regulated/governed. We now move on to of tying to change, or re-regulate, commodity chains the less desirable arpects of commodity production, circulation, and consumption. 8.4. Re-regulating Commodity Chains: The World of Standards “There are many approaches through which diferene players may seck co alter che prevailing waye in which a commodity chain operas. For exampley in ‘Chapter 6 we examined how certain groupe of workers have the necessary agency ‘to challenge established ways of working in their industry through engaging in {ierene forms of production politics, whle in Chapter 15 we will explore the COMMODITY CHAINS 28 potential for different forms of consumption politics ~ interventions initiated at ‘the consumption end of commodity chains vhrough a desire to improve conditions ‘at various points up the chain. Here, we focus on how global commodity chains are increasingly being re-regulated through effors to impose consistent standards ‘on the ways commodities are produced and distributed within the global economy iMustrates, however, the world of standards sa broad and varied be applied to diferent aspects of the commodity chain — for lity, environment, or labor conditions. Second, the precise Antibure of Seandard Variabiliry Field of application © Quality assurance Environmental © Health and safery © Labor © Socialeconomic © Ethical Form '* Codes of conduct © Label Coverage + Firmlcommodity chain specific Sector specific + Generic Key drivers, + International business Intemational NGOs ‘© Imernational trade unions ‘© International organizations (Cenification process ‘+ Firs, second, or third party pes 4 Privatesector auditors # NGOs © Government Regulatory implications * ‘Legally mandatory © Marker comperition requirement Voluntary Geographical scale © Regional (eg.,a US. state) © National Source Adapted from Nadvi and Walwing (2004)Box 8.4 Environmental certification of the dolphin-safe tuna commodity chain ions, and js predicated on 2 complex interwoven set of environmental discourses in248 ORGANIZING ECONOMIC SPACE and Ell’s system would bring legitimacy co their new labeling practices. ‘By 1993, significant differences berween the Thai and U.S. branches of Ell ‘were developed in relation to their framing of the certification standards al stan- ‘concerned with the neglect of small-scale fishers caught in EU's universal ‘sandards for gillnes, These fshers often used gillnets shorter than two. [ilometers and rarely targeted cuna. This case demonstrates thatthe regul tion of global commodiry chains depends on complex relationships berween fa whole host of actors and institutions in diflerent geographic tions. Today, Ell continues to face challenges from Latin America and Asia who have branded its actions of “universalizing™ US-origin standards as fundamentally neocolonial. Here, we will use the fst ofthese many lines of variation to explore some concrete examples of standards in practic, looking in man a initiatives aimed primarily atthe labor, economic, and gualisy assurance aspecs of commodity Chains. At the most global level, the United Nations Global Compact, launched by former Secretary-General Kofi Annan in July 2000, policy ata fos i March 8, 2012). world’s largest voluntary corporate sustainability initiative. The Compact’s main objectives are to embed these peinciples in business practices around the world and thereby support the broader development goals of the UN. Key elements include the following: ‘© Adopring an established and globally recognized policy framework development, implementation, and disclosure of envicon governance polices and practices commoniry CHAINS250 ORGANIZING ECONOMIC SPACE Fairtrade is based on a central codestandard, it aso signifies to the consumer that a product meets that standard through is labeling system. in an even more specific form, mul-stakcholder organizations ean be estab> tished to regulate labor standards ad conditions in global commodity chains. The UKs Ethical Trading Intative (ETI is a multistakeholder orgar lished in 1997, and funded jointly by its membership and the U.K, government's ‘Department for Intern syelopment (DFID) (the Fair Labor Association is 1 similar initiative in che U.S. context). By mid-20L1, the ETI was constituted by 52 cocporate members with a combined tumover of over £107 billion (including ig into the U.K. mazket, Asda, The Y charities such as Christian Aid and (Oxfam), and representatives from nine mal trade unions representing 0 million workers worldwide. The ETI has established a Base Code in supply chains (www .thicalteade.org, accessed on March 8, 2012): 1+ Employment is freely chosen Freedom of association and the right co collective bargaining are respected Working conditions are safe and hygienic ‘+ No discrimination is practiced ‘© Regular employment is provided Noharsh of inhumane treatment is allowed “While most of the retailers use large international, independent social auditors such as Bureau Veritas, some pass on the auditing role ro key suppliers, and ‘presence in Key chain, and also that several ofthe Base Code provisions cely partly on government ‘ction in source countries (eg the right to form a labor union) ‘Apart from these broad instxutional recent decades have also essed the rise of private standards imposed on different commodi agrifoods. These standards allow individual firms (buyers) t0 be through a new form of collective governance o' chains, Through a ‘market-based mode of self-regulation among suppliers, these buyers are able to iscipline at a distance their suppliers elsewhere who are expected 0 conform to aormnal (good or best) farming practices. Global-GAP (good agriculeural prac- tices, for example, is @ scheme launched as 2 business-to-business standard by commopITY CHAINS 251 « coalition of mainly British and Dutch retailers in 1997 ro harmonize existing disparate and chain-specifc supermarket prot food safety and quality (vrww.glabalgap.org, accessed on March 8, 2012). Since then, the scheme has ‘expanded significantly beyond an exclusively retaler-based model 0 2 more open ma koler err at nla cailer, prodcer,mpur sappy and {alls under these schemes that ace rapidly becoming mainstream: while the overall, level was estimated at just 1% of total production in 2003, by 2009 Utz Kapeh Rainforest Alliance 1.5%, Fairtrade 1%, In the same year, Starbucks’ CAFE practices a their coffee purchases ~ equivalent ro 136,000 tons of coffee 100% coverage by 2015. [Ar the more general and international level, 1509000 (quality) and 15014001 (environment) provide excellent examples of generic management systems stan- dards that can be applied to any organization lage or small, whatever is product ‘sar asurance to customers by demonstting tata supplier confor toa formalized gusty and ensitonmetl manages sem. The een wich at een a set of writen rules, cover & wide ange of ‘such as a ficm’s c oncoming oder and the good and seas itp TSO14001 requites an organization of any size‘Table 8.3. Certification schemes for sustainable coffee Name Your ‘Aaorsor (Charactessies ‘Geographic scablinhed Ocganizations Coverage Seung the Standards Fairtrade 1988 (in Tirade Labeling ‘Minimum guaranted price paid to registered Global ‘Netheslands) ‘Organivations ‘sal farmers organization that macch Totcmnsconal [FLO] Standards om soetoeconomic development Rainforest Allance 1996 Ramos Alence—Ceties fare om the basis of sustainability Primaly ‘tied Srandards;covers environmental prorecton, Latin [shade-growa) ‘ind eboandiving condos ant Aner ‘community relavons Ue Kapeh 1997 Ute Kapeh Foundation Inclades standards on environmental prorestion Global sd managemetandlabor a ng icdfiendly coffee 2000 fn Migeatory Minimum stadaeds on vegetation cover and Latin (shade geowa) ter (MBC) species diversity needed to obtaimuse of ‘America [bal alo eovers soil management Globsl-GAP Code 2003 (Burep-GAP Global GAP ‘Designed ro offer asurances about how cfice Global for Green Coffee until 2005) ‘Organisation is grown on the farm wih respec to tevironmensal inipact the use of chemical Inputs, and worker health and sary Starbucks CAFE «2004 (guidelines -—-Starbucke Corporation Guidelines designed to eosuehigh-avality Global (coffe and farmer established in ‘coffe, peter he environment, and promote sity) peaches 2001), faces beeen ames, wees, ‘Common Code foe 2005 4 Association “To achieve baseline levels of social, ecological, Global the Cofee (Germany) ‘economic sustainably foe all eypes Community AC} ‘oes production systems “Source: Adapted from Davicon and Ponte (2005), Table 5.11; and Neilson and Pritchard (2008), Table 6.1 PEPE TPES pe Piss rile Bey aTE aber Satie i] e ne ge teseee es so eyee8 se a) F 2F é eeu Glo | fe Hone PiDESEGSLAED [TEA a cele petigcciiatparterazh =|. oz/é 8 aegplidips Paegepebees gle g|eekeone tle & Pee re FLyE 3 qagies Prketeieigie 2hb: SIE deaake 2d ghee u a |b EORERS of eekhes i £2 eigie? GELSERPST eda; Qa lEegtecu|#e le Bgerae a8 gozeae 3s seroecules |e ieadie SEPPLPPESD gS) 2lGy 218 y254 ORGANIZING ECONOMIC SPACE FURTHER THINKING Box 8.5. The limits to standards? Sexcion 8:4 has introduced the increasingly complex world of standards involved in the ongoing regulation of commodity chains. However, there is ‘always the danger that the initiatives themselves can become incorporated into, or even commodified as pare of, the capitalise sytem —chat is, as another way for business firms to make: money. Hence, itis important © think carefully for instance, about the motives of firms for participating in standards schemes, with many being based on the voluntary participation of sigaitc to che extent that only the bést organized and most well-funded facmers 2 profiable ‘exercte, Other critiques of such regulatory initiaci ‘geographical. Many of the codes of conduct or general standards are by ‘ude abseractions and simplifcations. A simple statement osinds promising on a first read, but same locality. Calevating ‘wage rates would be hogele expensive and time-consuming. by focusing primarily on formal employment relations, these rmieait to help or promote (see also Box 8.4). The result may be standards that are detached from sectoral and geographical contexts and irsen che position of cereain groups of people in particular hile there ace many positive aspect to different regulatory and codes of conduc, we must interrogate them wich the same critical economic: geographical perspective that we would any aspect of che economic system, COMMODITY CHAINS 255 8.5 Where Does a Commodity Chain End? From Waste to Commodities Again commodity chain. This cicularity and becomes obvious when we examine256 ORGANIZING ECONOMIC SPACE Sitakunda, I also compensites for the lack of indigenous production in these je, and dismantling. In cerms ‘ld computer monitors can be converted into tre monitors, Even simply ismancing an ld computer monitor and sling aan ent pais can generate profits oF 230%. Once agai, the recycling of eee ceive waste marks the start of a new round of commodity stories and journeys. eee ah these examples serve to illustrat is that we Perhaps ned 0 ceconsier erevron of the end point of a commodity chain not simply as “waste,” bur c> snore sophisticated ways about the ongoing transformations of materials irene overlapping commodity chains that underpin the various products 8.6 Summary ‘As an economic system, capitalism serves #0 concral the intense connections rreuten distant producers and consumes that underpin its operation, The result fh a deceptively simple question as “Where does Jour Breakfas come from?” requires substantial “geographical devectve work” THarrick, 2000, p. 1178). While labels may eveal the country of oxein f 8 Fras produced. In this chapter, we have sen how the nation of the commodity ‘ile allows us to chart the geographical journeys taken by commodities, a they saavransformed from intl raw materials and ideas int finshed products and SErvices, thereby serving to connect producers and consumers. The preci maruse fake journey taken will vary temendousy from commodity to commodity. Each sad every commodity chain sdelineared by a particular sequence of value-adding aie dee, a diet geographical configuration, different combinations of modes f goveraance, and various institutional contexts. Commodity chalns are Os Important ~ and inherent geographical ~ organizational features of the conten poetry global economy; they are he hidden social rations that enable capitation potetcnd is global reach. Conceptually, the commodity chain is an extremely important integrative idea that allows us to reveal the interconnections Derwesn aemany actors sates, environments, and workers~that we considered in depth in Part Tf this book. “The careful mapping ing in the nature and initiatives through w! 1s opens up the potential for inrerven- Woof those chains. We have reviewed examples of Jumers, governments, labor unions, and businesses, COMMODITY CHAINS, ar ad perhaps unintended, outcomes, ting when and where exact) the waste products from one pa Sample essay questions ‘+ How does a commodity chain approach enable us to reconnect distane Aiferent ways? poeta opeaton? texts ofa commodity chain affect its258 ‘ORGANIZING ECONOMIC SPACE 4s What are the pros and cons of adopting standards-based approaches 0 ‘commodity chain regulation? 1s When and where does a commodity chain end? Resources for further learning, hapsthwww globabaluechains.org: This site contains a Wealth of concepeval and empirical material on global value chains, ‘e brtpuhwww.sourcerbap.org: An open source site thar literally allows users £2 map commodity chains for different products. berprew-unido.org: The United Nations Industrial Development Organiza tion (UNIDO) website also offers a wide range of data and reports on different commodity chains and the potential they offer for economic development in different localities. «- hapdiwwwwico.orgfindexasp: The website of the International Coffee Orga~ nization provides range of information on the coffee industry, and in particular, its evolving regulatory structures. «+ hupafenew.fairtade org.uk: The U.K.'s Faircrade Foundation is one of the ‘most wellknown attempts o improve the economic rerurns offered to com -modity producers. e hupshvwwfairtracing org: The website of a research project seeking to sup- pport ethical trade. 4 _hrxpsfwwviso.orgfisoen/ISOOnline frontpage: The International Standards Organization's website is rich in information on a vatiery of international cog: The website of The Waste of the World program, which is with recycling and waste economies within flobal reeycling networks. The project spans sites in South Asia (Bangladesh ‘and India) as well as the United Kingdom and continental Europe. References (2009), Frontiers of Conumodity Chain Research, Stanford: Seaford Univesity COMMODITY CHAINS 259 Daviron, B, and Pont, S. (2005), The Coffe Paradox: Global Markets, Commodity ading in global valuechains: a case seudy in China and Southeast Asia. Journal of sonics industry. Geografiska ArealerB, 93, Making sense of global tandatds. IaH. Schmit ed, ‘nthe Plantation Districts of South India. Oxdord: Wiley: BlackwellORGANIZING ECONOMIC SPACE “The evasion of global value chains: displacement of and Prichard B (2011) Reems : ‘the AnstraliaJapan beef trade. Journal of Economic Se cet omar a on ret te ome ees a Seo ee Sete see nee sjaice revolution”? Regulation, markers and consumption in the Wold Development 30 1099-1122 el cing pt or he global hig intr — he case Ecos Gaogapi, 821-38. Canyon Gouin, Invoducing ‘London: Arnold CHAPTER 9 TECHNOLOGICAL CHANGE Is the world getting smaller? Goals of this chapter + To demonstrate how certain technologies can be used to transcend time and space ‘To understand how technologies can be used to generate both new products and new production p To appreciate the varia {impacts of technology on eco To recognize how the geography of technology production is highly 9.1 Introduction In a cramped coom in Changsha, China, over 100 employees work ten-hour and research deparments, ‘where highly skilled female graduates can earn up to USS400 a month working as 0,000 such firms customer service operators. There are estimated to be at lea in China with an average size of 2-10 computers, Regi and conditions are lax. The young, largely unskilled “‘playborers” earn around US$130~-200 a month, and although comm 2 given the long shi is equates to an hourly wage s, however, employing 2 firm such as Wow7gold is a time- and cost-efficient way of circumventing the ‘more mundane aspects of progressing through virtual worlds