Abstract
The Global Value Chain (GVC) approach has emerged as a novel methodological device for analysing economic globalization and international trade. The suitability of the chain metaphor and strategies for moving up the ladder of GVCs (“upgrade”) is widely echoed in international development agencies and public agencies in the Global South. Most of the existing GVC studies focus on new forms of firm-to-firm relationships and the role of lead firms and chain governance in defining upgrading opportunities. This paper examines the role of the state and local institutional initiatives in promoting upgrading in agricultural GVCs originating in rural areas of the Global South. The paper draws on research conducted in the South Indian smallholder tea sector. The paper argues that successful forms of state-led chain interventions not only contribute to upgrading of the smallholder-brought leaf factory strand of the GVC originating in the South Indian tea sector, but might also result in increasing bifurcation of smallholders integrated into high-margin markets through prominent bought leaf factories and a mass of “others” outside this tightly coordinated strand of the tea value chain.
Highlights
Since the early 2000s, the Global Value Chain (GVC) approach has proliferated as a novel methodological device for analysing economic globalization and international trade [1,2,3,4]
The paper contributes to the writings discussed above by investigating the role of public policy and institutional support on value chain upgrading strategies, but it aims to take the discussion regarding upgrading processes further by suggesting that successful forms of state-led chain interventions contribute to upgrading of the strand of the GVC originating in the Global South, but might result in increasing bifurcation of smallholders integrated into high-margin markets through prominent BLFs and a mass of “others” outside this tightly coordinated strand of the tea value chain
The Tea Board of India and UPASI-KVK have provided the arenas for product and process upgrading in the smallholder–BLF strand of the value chain, against a backdrop of severe price discounts attached to Nilgiris tea and exclusionary dynamics waves in higher-margin markets resulting from the proliferation of product certifications, private proprietary-defined quality and process standards and other types of private governance in retailer- and brand manufacturer-driven strands of the GVC over the last decades
Summary
Since the early 2000s, the Global Value Chain (GVC) approach has proliferated as a novel methodological device for analysing economic globalization and international trade [1,2,3,4]. Apart from certification of its own plantations, Unilever increasingly sources tea from smallholders and engages in programmes on Sustainability 2016, 8, 1102 smallholder compliance with Rainforest Alliance certification, for example in Kenya (for more details see [14,15,16]) Branded tea manufacturers such as Unilever and Tata Tetley are present in the South Indian tea landscape and coexist with the smallholder–bought leaf factory strand of the chain. A brief outline of the historical development of the tea sector is provided, followed by recent state-governed efforts to upgrade smallholders and BLFs in the South Indian tea sector (Section 4).
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