Commodity Chain

A commodity chain is the process or series of steps that describes the life span of a commodity before it arrives at the consumer. The process of planting an orange tree, picking the orange, waxing or otherwise treating it, packaging it, and delivering it to a retail store is one commodity chain, and sourcing tomatoes, peppers, chiles, onions, garlic, lime, and salt for salsa; heating it and jarring it; packaging it; shipping it to restaurants; and serving it with a bowl of chips is another. The chain is not just a list of steps, though—commodity chain theory values and emphasizes the contributions of the actors driving the chain: the workers planting the tree and harvesting the fruit, the people pasting labels to jars, or driving the trucks to the warehouse. The dependence of those actors is a frequent topic of discussion in commodity chain theory. Commodity chains can be extremely complex, but even the most complicated ones are becoming more transparent in the 21st century.

Commodity chains are highly affected by the market. Each step of the chain involves a business that is concerned with making money, with the regulations governing its activity, and with competing with the other businesses that perform its function. Such steps include not only production and processing but also advertising, marketing, and research. Ideally, healthy and successful food commodity chains provide affordable food products that are still safe, without sacrifices in quality, while constantly expanding into new markets. Prices [Page 77]remain low because of the high competition and the economies of scale that reduce per unit costs at each stage, as well as, in some cases, the ability to benefit from comparative advantages. Although it is only recently that it has become normal in a developed country for a family's meal to consist primarily of food that did not originate locally, food commodity chains have always spanned great distances—early trade routes, even in prehistory, included food commodities, and diplomatic relationships between countries ever since have usually included some trade in food. The spice trade was the most lucrative food commodity chain, because of the long shelf-life of its products and the high ratio of value to volume relative to things like grain or fruit. The Industrial Revolution brought refrigeration, fast transport, and better, faster methods of canning and otherwise preserving food, whereas the 20th century introduced cheap air transport, preservatives, and a greater degree of automation in factory work. As a result, food exports soared from 4 million tons (worldwide) around the time of the Civil War to 40 million tons when World War I started. Government regulations quickly became a normal fact of life for those in the food industry, as one law after another was passed in response to food safety concerns and crises brought about by this expanded activity.

Commodity chains demonstrate the interconnectedness of the global economy, as Illinois college students serving espresso in the student union are bound up in the same chain as Tanzanian plantation workers. Tracing a commodity chain tells you more than just the life of the commodity itself. It tells you who holds the power, who profits from the commodity, and who influences its life. Since the 1990s, for instance, there has been a great deal of discussion about the power that large bookstore chains have on the publishing industry, particularly with respect to fiction and popular nonfiction. Because those chains like to have broadly similar inventories in all their stores, their purchase orders represent a sort of “voting bloc” that outnumbers any other smaller store or even regional chains. Although publishing is not a democracy, it is market driven, and those agents elsewhere in the book commodity chain—publishers, editors, literary agents, authors, illustrators, and the employees and staff of all the above—are arguably swayed by the knowledge that a given book will or will not appeal to that voting bloc. Similarly, we can see the ways that supermarket chains have a great deal of control over fresh vegetables, and that coffee roasters have more control over the coffee market than growers do.

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