Rent appropriation among rural entrepreneurs: three experiences in coffee production in Brazil

Abstract

The purpose of this article is to answer the question of whether there are sustainable, economically feasible strategies that can capture agricultural income. To this end, the body of work on why entrepreneurs choose value-capturing and value-adding strategies is analyzed and then a model is built to analyze differentiation in the rural sphere. Four theoretical perspectives are presented: Strategic Positioning Analysis, Resource-Based View, Transaction Cost Economics, and Knight's Profit Theory. Drawing on the model, three strategic experiences from the Brazilian coffee agro-industrial system are examined, divided into three categories: joint interdependence, which presents the strategic focus of value creation through direct exports of good quality coffee, by the Guaxupé Regional Cooperative of Coffee Producers (Cooxupé); sequential interdependence, which examines the quality coffee brand strategy of the roasting company illycaffè; and mutual interdependence, in which the experience of Poço Fundo producers, aimed at adding value to coffee based on the sustainable coffee market, is analyzed. The most successful strategy in terms of representation (number of producers involved) appears to be that which focuses on scale and scope in the marketing of specialty coffees. Another interesting finding regards a new paradigm in the relations between the rural sector and the downstream segment regarding beverage quality and sustainability issues.