Sustainability and economic governance: Reconfiguring cocoa-chocolate production networks in Indonesia

Abstract

The concept of sustainability has recently become integrated into mainstream commercial spheres of cocoa-chocolate industries, whilst the concept remains elusive and debateable in the political sphere. The sustainability initiatives attempt to improve both farm management and farmer livelihoods by voluntarily integrating certification schemes (e.g., RA, Utzcertified, and Fairtrade) along with other initiatives. Exploring the implications of the sustainability initiatives beyond vertical industrial governance, this study contributes to the extant literature on GVCS/GPNs and provides an understanding of the extension of sustainability concept into horizontal extrafirm bargaining strategies. This study highlights the increasing industrial-centred power beyond a reorganisation of industrial activities of two case studies, Mars and Nestlé. The initiatives have resulted an increase vertical coordination with the upstream cocoa production networks, as the schemes become an instrument to minimise the supply risks. Also, the horizontal engagement through public private partnerships has created a negotiation space with extrafirm actors, yet the state participation in sustainability (keberlanjutan) discourse appeared to support local industrialists and the transnational firms to secure cocoa supply. Sustainability has strengthened the firm position in the upstream production networks, but the local actors and farmers continue struggle to overcome increasing market barriers and uneven competition. Eventually, the initiatives emphasize the economic interests, but at the expense of the cheaper productive capital supplied by the smallholder farmers and creating new processes of uneven development.