A farmer growing coffee, cocoa or pepper receives a share of the final price that has fallen for thirty years.
The itself has not changed, and the value added to it has moved elsewhere.
, blending, branding and retail all occur in the importing country.
explain part of this and are rarely discussed by the people who quote the price gap.
Raw beans enter most markets at a low rate, while processed products face a higher one.
That is a deliberate protection of the processing industry in the importing country.
It has been reduced in several agreements and persists in enough of them to shape investment decisions.
Standards operate in the same direction without any tariff.
A buyer specifies moisture, size, and a certification scheme, each of which requires equipment and paperwork.
A that can meet them earns a ; a household that cannot sells to a trader at the gate.
The certification itself costs money annually and is paid by the party with the least margin.
Countries that moved up the chain did so with a policy that is unfashionable to describe.
They invested in processing capacity before the market existed and protected it while it became .
Where that protection was permanent, the industry remained inefficient and expensive.
Where it was conditional on export performance and withdrawn on a schedule, several industries became competitive.
The distinction between those two cases is the whole of the industrial policy literature, compressed.
For a producing country today, the binding constraint is rarely the tariff and frequently the electricity supply.
A roasting plant that cannot rely on power will not be built whatever the trade agreement says.