Abstract
Smallholder engagement in Global Production Networks (GPNs) significantly impacts rural livelihoods in the Global South. We contend that smallholders do not operate like firms, such that previous upgrading concepts are analytically inadequate to address the livelihood complexity of these actors and, therefore, the developmental implications of GPN engagement. We address this limitation through a theoretical agenda that develops the pivotal concept of ‘livelihood upgrading’, referring to a household-scale process of changing access to livelihood resources through GPN participation. Applying this concept to commodity-producing smallholder fishers and aquaculturalists in an Indonesian coastal village, we identify five livelihood upgrading pathways: commodity-supplier; functional; inter-sectoral; labour-based; and coordination-based. Alongside these, we identify the possibility of livelihood downgrading, often emerging as a result of livelihood upgrading by others within the same community. Our findings emphasise how GPN integration reconfigures the livelihood resources available to individuals through a dynamic politics of influence and access, resulting in uneven livelihood trajectories.
Keywords
Introduction
It was a regular morning at the Pitu Sunggu jetty, located amongst the mangroves in a small coastal village 70 km north of the provincial capital of Makassar, on the Indonesian island of Sulawesi. Fishers on small outboard motorboats landed their catch of blue swimmer crab (BSC) as a collector waited with his weighing scale and 20 l of iced storage. He was offering cash for the crab, which he transported to village-based mini-plants for processing, and which would likely be eventually exported to the US. However, in 2022, fishers were struggling with low prices, which had halved in the previous year: A glut in the US crab market was apparently behind the crash. Consequently, many fishers had shifted from crabbing to seaweed farming, attracted by higher prices due to strong Chinese demand. Villagers had been cultivating seaweed since the early 2010s and this had allowed many to considerably improve their livelihoods, and it was even generating further work opportunities in the village for others employed in tying seaweed seedlings to lines. Back further from the jetty, the village landscape was dominated by brackishwater aquaculture ponds (tambak), where households cultivated shrimp, milkfish, and tilapia. These ponds, which were now in environmental decline, had been mostly converted from rice fields during an export-oriented shrimp boom in the 1990s – fuelled initially by Japanese demand.
Rural livelihoods in the Global South are thus increasingly shaped by participation in global production networks (GPNs), as smallholder households 1 engage in commodity production for international markets. This paper seeks to develop a conceptual model for smallholder-based upgrading (and downgrading) resulting from such engagement, commencing with recognition that current understanding of ‘value capture trajectories’ are generally firm-centric (Vicol et al., 2019). As such, they require adaptation to the specific circumstances of household producers as economic actors, which we argue are best addressed through a livelihood pathways approach. We examine how households navigate opportunities and risks within GPNs, presenting empirical data from a coastal village in Indonesia, where producers are simultaneously embedded in shrimp, crab, and seaweed networks. This presents a case of multi-sectoral engagement in a single locality, where livelihood outcomes are shaped by environmental conditions, resource access, institutional arrangements, social and economic networks, shifting global demand, and the sourcing strategies of downstream buyers.
The conceptual framework of GPN theory highlights how regional development outcomes are powerfully influenced by the intersection of global network dynamics and regional institutions and assets (Coe and Yeung, 2015). Existing GPN and global value chain (GVC) frameworks have provided powerful analytical tools for understanding development processes, particularly through the concept of ‘upgrading’ (Gereffi, 1999), alternatively referred to as ‘value capture trajectories’ by Coe and Yeung (2015). GPN analysis has long attempted to incorporate non-firm actors within the networks that shape development outcomes through its broader interest in regional institutions, labour, and territorial development (Henderson et al., 2002). A growing body of scholarship has further attempted to extend the scope of GPN/GVC analysis to include household-level dynamics, informal labour, and social reproduction (Barrientos, 2014; Bolwig et al., 2010; Challies and Murray, 2011; Karatepe and Scherrer, 2024; Neilson, 2019; Neilson and Shonk, 2014; Schoneveld and Weng, 2023; Vicol et al., 2019). This literature generally emphasises the uneven and contingent nature of smallholder participation in GPNs, shaped by governance structures, institutional environments, and access to livelihood resources.
In this article, we further develop GPN theory by extending the central notion of upgrading (improved value capture trajectories) into smallholder production contexts dominated by household commodity producers rather than firms. This requires foregrounding the importance of household access to a broad range of environmental, social, technical, and financial resources. It also requires sensitivity to the prevalence of household-scale pluriactivity, and a reliance on unpaid household workers and informal labour. We suggest that this analytical challenge is effectively addressed by integrating the GPN framework with a livelihood pathways approach through the concept of ‘livelihood upgrading’. We seek to advance debates on upgrading within GPNs by offering livelihood upgrading as a conceptual alternative to firm-centric approaches in the context of smallholder-dominated production landscapes.
Livelihood upgrading within global production networks
We use the GPN framework (Coe and Yeung, 2015; Henderson et al., 2002) to address how spatially-dispersed actors integrate into a globally-coordinated production complex, and how this affects local development outcomes. Global coordination (or governance) of these networks is enacted by powerful companies, known as ‘lead firms’, who are situated at key value-adding nodes and whose sourcing strategies can shape the terms of participation for actors elsewhere in the network. The GPN approach emerged in response to criticisms of the GVC approach for focusing too narrowly on inter-firm transactions, allegedly overlooking the roles of the state, institutions, consumers, labour, and civil society organisations (Henderson et al., 2002). Indeed, the GPN approach offers a broader analytical lens, emphasising value creation and capture, extra-firm interactions, and the territorial embeddedness of these networks (Coe and Yeung, 2015; Hess, 2004).
A core concept within both GVC and GPN frameworks has been ‘upgrading’, which seeks to explain regional development trajectories resulting from chain and network interactions (Humphrey and Navas-Alemán, 2010; Neilson, 2014; Ponte et al., 2019). Gereffi (1999: 52–53) originally defined ‘industrial upgrading’ as a ‘process of improving the ability of a firm or an economy to move to more profitable and/or technologically sophisticated capital and skill-intensive economic niches’. An understanding of upgrading as firms assuming new value-adding functions in a value chain was referred to more specifically as ‘functional upgrading’ by Humphrey and Schmitz (2002), who also recognised three additional modes of upgrading: process upgrading (improved productivity); product upgrading (heightened quality and per unit value); and inter-sectoral upgrading (using resources and knowledge accessed from one chain in another). The terminology later evolved into ‘economic upgrading’, referring to a process by which economic actors ‘move from low-value to relatively high-value activities in global production networks’ (Gereffi, 2019: 240–241, emphasis added). Riisgaard et al. (2010) adapted this general framework to the context of small producers, identifying seven upgrading strategies, grouped into three fundamental types: (i) improving product, process, and volume (at the same node); (ii) changing or adding functions (changing nodes); and (iii) improving coordination through either vertical or horizontal contractualisation. Riisgaard et al. (2010) saw upgrading as something that happens to a specific actor inside the chain, hence omitting inter-sectoral upgrading from their framework.
Upgrading of any sort, however, is certainly not a guaranteed outcome of GPN participation, let alone for actors engaged in relatively low-value commodity production. As such, it is widely acknowledged that GPN engagement may have a ‘dark side’ when it results in worsening economic, social, or environmental outcomes for participants (Coe and Hess, 2011). Coe and Yeung (2015) highlighted how a firm (or a region) may sometimes benefit more from decoupling from a GPN (and potentially recoupling with a different network). To move beyond the alleged determinism and linearity associated with prior conceptualisations of upgrading, Coe and Yeung (2015) propose ‘value capture trajectories’ as an alternative heuristic that focuses on ‘achieving a better deal’, acknowledging that this might involve chain downgrading (thus building on Ponte and Ewert, 2009). To be clear, our continued use of the term ‘upgrading’ in this paper should not imply linearity (i.e. progression from product to process to functional upgrading) and nor does it assume that the ‘best deal’ for household actors will be necessarily achieved through continued GPN engagement. However, given the widespread acceptance and use of the term in the literature, we refer to ‘upgrading’ when GPN engagement results in a positive ‘value capture trajectory’ for households and ‘downgrading’ when it does not. Furthermore, we assert that the term ‘livelihood upgrading’ clearly identifies our key analytical concern as understanding livelihood trajectories resulting from GPN engagements specifically.
It has long been acknowledged that firm-level value capture fails to guarantee improved conditions for workers within firms, leading Barrientos et al. (2011) to suggest analytical attention was required towards ‘social upgrading’. Rossi (2019: 272) defines social upgrading as the ‘process of improvements in the rights and entitlements of workers as social actors by enhancing the quality of their employment’. While some recent studies have applied social upgrading to smallholders (Karatepe and Scherrer, 2024), the considerable differences between the livelihoods of wage workers and household commodity producers make this use problematic – unless adequate attention is afforded to the political economy of household livelihoods (Vicol et al., 2019).
As in the case of social upgrading, it is often the dynamic interactions between GPNs and regional institutions that determine developmental outcomes, as encapsulated within the GPN concept of ‘strategic coupling’ (Coe and Yeung, 2015; Coe et al., 2004; Yeung, 2016). In smallholder contexts, Bolwig et al. (2010: 174) similarly identified the need for integrating ‘horizontal elements’ with ‘vertical elements’ of value chains, recognising that ‘upgrading and inclusion for small producers require interventions at sites located beyond their areas of operation, often drawing on external resources and networks’.
Despite the commitment of the GPN framework to analytically consider the role of extra-firm actors in the development process, this is still rarely extended to the unique positioning of non-firm economic actors. For example, Coe and Yeung (2015: 170, emphasis added) argue that ‘the starting point for our analysis is that the key mechanism that ultimately drives economic development in the contemporary era is the insertion or plugging-in of firms into global production networks’. Yet, non-firm economic actors (such as household commodity producers) also plug into GPNs and, given the global concentration of poverty in rural regions, it is clearly important to better understand the development outcomes of this process. Applying upgrading (or ‘value capture trajectories’) directly to smallholder-dominated production landscapes has proven difficult due to the multifaceted identity of smallholder households (as simultaneously both capital and labour), their reliance on access to a range of tangible and intangible resources and assets, and their tendency to pursue pluriactive livelihoods beyond a single GPN (Vicol et al., 2019).
A growing body of scholarship has, however, extended GPN and GVC analysis to consider development processes triggered by the involvement of smallholder households as petty commodity producers within broader networks and chains. Bolwig et al. (2010: 177, along with a companion piece, Riisgaard et al., 2010) pioneered this approach by broadening the understanding of upgrading in the context of small producers to be ‘a desirable change in participation that increases rewards and/or reduces exposure to risk – where rewards and risks are understood both in financial terms and with regard to outcomes related to poverty, gender and the environment’. While their fundamental contribution was to develop a conceptual framework that integrates horizontal and vertical elements of value chains, they also implicitly advocated for a livelihoods perspective by identifying a tendency for value chain studies to ignore household-scale pluriactivity. Riisgaard et al. (2010: 203) further explain that ‘the implications of upgrading should not focus narrowly on the power relations within the value chain or the direct benefits of participation, but should consider the full range of livelihood activities and networks on which participants and their communities depend’.
A livelihood perspective (Carney, 1999; Chambers and Conway, 1991; Natarajan et al., 2022; Neilson, 2025; Rigg et al., 2016; Scoones, 2015) has come to encompass a broad range of analytical approaches to understanding the lived experience of the world’s poor and is particularly well suited to smallholder contexts. It emphasises how a range of social, human, financial, physical, and natural resources (sometimes referred to as ‘capitals’) are mobilised by individuals and households to construct a livelihood strategy, and how access to such resources is mediated by a local politics of access and influence (Natarajan et al., 2022). A livelihood, moreover, is often constituted by diverse (and multiple) income streams, degrees of self-provisioning, and high levels of informality and reciprocity. Unlike capitalist firms, smallholders balance non-wage family labour, subsistence needs, and social obligations with market-driven activities. As a result, their decision-making processes are informed by considerations of profit-making certainly, but these intermingle with concerns for risk minimisation, resilience, management of family dynamics and non-market relations, cultural identity, and the positioning of commodity production within broader household portfolios (Neilson, 2025). As a result, household producers navigate GPN involvement somewhat differently to firms (Vicol et al., 2019).
This paper builds on a longer tradition of integrating livelihoods perspectives within GVC/GPN theory. Challies and Murray (2011) used Chile’s raspberry sector to examine how smallholder’s access to different livelihood assets mediated global market participation outcomes. Neilson and Shonk (2014) demonstrated how GVC-based interventions in Indonesian coffee-producing communities often overlook the importance of local socio-economic and cultural contexts in shaping rural welfare outcomes. Fold (2014), meanwhile, enriched GVC analysis by incorporating settlement-level livelihood diversification and spatial dimensions from GPN theory through a comparative study of Vietnam’s central highlands and Ghana’s western region. Vicol et al. (2019) applied a political-economy-informed livelihood approach to assess livelihood pathways and trajectories within an agricultural value chain in India that was dominated by a contract-farming scheme. More recently, Schoneveld and Weng (2023) introduced a value network approach that reconceptualises how smallholders derive and capture (economic, social, and environmental) value in agrifood chains. Applying a transaction cost analysis (rather than GVC/GPN specifically), Escobal and Cavero (2012) made an important contribution by demonstrating the skewed distributional effects within a rural community in Peru resulting from engagement with new potato marketing chains. While such studies tend to highlight how livelihood improvements are not an inevitable consequence for all smallholders participating in a GPN or GVC, they also suggest (often implicitly) that GPNs and GVCs can present an important source of both tangible and intangible livelihood resources for many households.
The sustainable livelihoods framework (Natarajan et al., 2022; Scoones, 2015) generally highlights the pivotal role of access to natural resources in supporting rural livelihoods, and the vulnerabilities that emerge when such access is eroded. Access itself, as Ribot and Peluso (2003) argue, should be understood as a relational process shaped by social, political, and institutional mechanisms rather than merely formal rights – a perspective critical for analysing how GPN governance structures mediate households’ ability to benefit from livelihood resources. ‘Environmental upgrading’ in GVCs, meanwhile, refers to the process by which firms and producers reduce the environmental impacts of their activities through changes in products, processes, or organisational practices (De Marchi et al., 2013). Lead firms may contribute positively to environmental outcomes through sustainability initiatives such as promoting practices such as agroforestry, organic farming, sustainable catch sizes, or water-efficient irrigation (De Marchi et al., 2019). Krishnan et al. (2023), furthermore, demonstrate how environmental upgrading – in their case, beneficial for powerful actors in the chain – can result in environmental downgrading for smallholder livelihoods when local ecological conditions deteriorate. The concept thus holds potential relevance for livelihood upgrading by linking GPN-induced environmental change to access to livelihood resources by smallholder producers.
Vicol et al. (2019) argue for the conceptual integration of a ‘livelihood pathways’ approach and value capture trajectories in GPNs. Livelihood pathways provide a dynamic, historically-embedded understanding of how structural processes (dynamically reconfigured, we would add, by GPN integration) interact with household-level strategies (De Haan and Zoomers, 2005, see also Dorward et al., 2009). Linking upgrading with livelihood pathways suggests that GPN structures and dynamics (including their inherent power relations), may offer crucial insights into household strategic behaviour that contributes to shaping livelihood possibilities and pathways. Vicol et al. (2019: 990) conclude that ‘if GPN 2.0 is to offer a broader explanatory framework of global uneven economic development, incorporating rural territories is critical. Further work to bring a livelihoods perspective to bear on GPN 2.0 therefore provides a promising way forward to expand GPN research to smallholder production landscapes in the Global South’.
We respond to this call by developing the analytical concept of ‘livelihood upgrading’. Neilson (2019) introduces livelihood upgrading as a research agenda to explore how smallholders can potentially improve their livelihoods through GVC/GPN participation. He recognised that livelihood upgrading needs to consider how a ‘better deal’ for households can be attained through a diverse range of livelihood trajectories. However, the concept lacked a clear guiding definition. Here, we define livelihood upgrading as a process whereby smallholder households improve access to livelihood resources as a result of participating in GPNs, where they are differentially affected by coupling with multi-scalar institutions of access and influence. As highlighted by Natarajan et al. (2022), livelihoods are inevitably shaped by a dynamic, multi-scalar politics of access. Our focus in this article is on how the institutions that affect the ability of households to access livelihood resources are actively reconfigured by GPN participation. We further contribute a typology of livelihood upgrading pathways that captures the multidimensional nature of smallholder engagement with GPNs and its impacts on livelihoods (drawing inspiration from Humphrey and Schmitz, 2002; Krishnan et al., 2023; Riisgaard et al., 2010; Schoneveld and Weng, 2023).
Methods
We utilise a case study approach to explore livelihood upgrading in a situated context (Yin, 2012) by using qualitative data collection and analytical techniques (Stake, 2005). This involved documenting the effects of smallholder engagement with multiple GPNs at a single site to identify the processes through which access to livelihood resources was changing. Our approach can be best described as ‘grounded theory’ (Charmaz, 2006) in that we followed a systematic, yet flexible, fieldwork plan informed by previous scholarship on upgrading, livelihood studies, and household integration with GPNs and GVCs. We then engaged with our field data to inductively reconstruct theory from the ground up. To this end, we conducted two-months of intensive fieldwork in a South Sulawesi coastal village during 2022 that was simultaneously plugged in to multiple aquatic-based GPNs. We recognise, however, that a single case study is unlikely to represent the full range of livelihood upgrading possibilities, and we use this particular field site to demonstrate the utility of our proposed conceptual framework.
We observed and participated in the daily activities of the community, interviewed 39 household producers, and recorded 16 life history interviews of villagers aged 55 and older. 2 These interviews examined livelihood changes across different socioeconomic strata, gender, main livelihood strategies, and geographical settings, focusing on how villagers became commodity producers and how their livelihoods evolved. A further 36 interviews were conducted with non-smallholder GPN actors, including 8 local traders, 5 regional traders, 15 exporters, 2 industry associations, 6 GPN support actors (including boat makers, shrimp fry sellers, transport and logistics providers), and 4 village and 3 provincial government representatives. This was done through purposive and snowballing sampling techniques. Household producers and local traders were identified through community introductions, spontaneous interactions, and referrals from other respondents. Interviews were then transcribed and analysed thematically, following an approach that sought to connect livelihood strategies and outcomes to broader GPN dynamics.
The village of Pitu Sunggu
Of Indonesia’s 33 provinces in 2024, South Sulawesi province was home to the largest population of marine fisheries-involved households (11% of the national total based on BPS, 2013). Pitu Sunggu village, in Pangkep regency (Figure 1), covers 3.65 km² of land (BPS Kabupaten Pangkep, 2020) and has a 1.5 km coastline (BIG, 2023). In 2020, the village had 2112 residents across 642 households (Pitu Sunggu Village Profile, 2020), the vast majority of whom were ethnic Bugis, historically renowned seafarers and traders (Pelras, 1996). While livelihoods are diversified, they remain heavily dependent on coastal and marine ecosystems. Engagement with global markets has recently intensified, but it is not an entirely new phenomena in coastal Sulawesi, with sea cucumber (trepang) traded from the offshore archipelago to China since at least the 18th century (Sutherland, 2000). Other marine commodities from South Sulawesi have also entered global circuits of trade, such as tropical aquarium fish in the 1850s, and live seafood and tuna in the 1980s (Fougères, 2005).
Map of the case study site: Pitu Sunggu village in South Sulawesi province.
The village has, however, intensified its integration into GPNs in recent decades. Before the 1990s, most households engaged in small-scale farming, cultivating crops like rice, corn, cassava, and sweet potatoes on relatively infertile soils using traditional methods. Food scarcity was common, as Burhan (a male shrimp farmer in his mid-60s) 3 recounted: ‘Those times were very hard. Rice was very scarce such that we often mixed it with cassava or corn to be enough for the whole family’. Petty trading with nearby islands was another livelihood strategy for those with capital, while landless households typically relied on capture fisheries or farm labouring. Coastal foraging for clams, rebon shrimp (Acetes sp., locally known as ambaring), and crabs, as well as small-scale fishing, provided semi-subsistence and basic cash income for the landless. Some comparatively wealthy villagers owned larger boats and were involved in risky overnight fishing expeditions, during which deaths at seas were not uncommon. Those lacking access to land or large boats worked as farm labourers, crewed boats, or migrated (seasonally or permanently) to urban centres or resource-rich frontiers in places like Kalimantan and Papua.
Engagement with GPNs remained marginal during the 1970s and 1980s. A major shift occurred in the 1990s when some rice farmers transitioned to cultivate shrimp in brackish water ponds (known as tambak). This was driven by rising demand from markets in Japan, other parts of Asia, and the US (Hall, 2004). In 2022, during our fieldwork, primary livelihood activities in the village involved GPN participation through: (i) shrimp-based tambak production; (ii) market-oriented capture fisheries (mainly BSC); and (iii) seaweed farming. Access to these opportunities was highly differentiated, especially tambak operations, which was generally limited to landowners. Despite being filtered through other social and structural mechanisms of access, seaweed farming and BSC capture were relatively accessible to the landless and were pursued by a broader range of households and have generally resulted in improved livelihood outcomes.
Pangkep Regency, the district with the highest number of marine fisheries-involved households in South Sulawesi (BPS, 2013), has seen significant progress in socio-economic indicators over the past decade. Between 2010 and 2023, literacy rates increased from 89.3% to 94.8%, individuals with a high school degree or higher rose from 20.6% to 38.4%, household homeownership grew from 86.4% to 91.9%, access to personal toilet facilities increased from 52.6% to 87.7%, while illness rates declined from 20.9% to 10.4% (BPS, 2011, 2023). These broader socio-economic transformations are generally indicative of the livelihood improvements (on average) in the region that have, to a significant extent, coincided with enhanced regional integration into GPNs.
Despite the village’s strong reliance on GPN participation, it was not the sole avenue for livelihood improvement. Individuals accessed employment with the government and developed new businesses targeting local consumption. State-based development programmes (particularly small infrastructure projects mandated under the 2015 Village Law) enhanced livelihood resilience and even offered alternative opportunities for wealth accumulation for well-connected individuals tasked with delivering such programmes. A range of social protection programmes, including direct cash transfers (McCarthy et al., 2024), played a vital role in enhancing livelihood resilience among poorer households, albeit with limited prospects for accumulation. In 2023, 30.8% of households in Pangkep District received food assistance (BPNT), 27.7% held the Prosperous Family Card (KKS), and 22.85% benefited from the Conditional Cash Transfer (PKH) programme (BPS, 2023). While targeting remains problematic, these programmes have helped cushion vulnerable households from the harsher effects of livelihood downgrading that we discuss later.
Global production networks for Indonesian shrimp, crab, and seaweed
The globalisation of aquatic commodities has accelerated over the past four decades, driven by industrial demand for high-value crustaceans and marine bioproducts (Rabobank, 2023). Global per capita fish consumption rose from 9 kg in 1961 to 20.5 kg in 2019 (FAO, 2022). By 2022, the global crustacean trade reached USD 33.7 billion (OEC, 2024), stimulated by growing demand from the US, China, Japan, and the EU. During the same period, demand for carrageenan – a seaweed-derived hydrocolloid used across food, pharmaceutical, and cosmetic industries – also expanded. With more than 95,000 km of coastline and two-thirds of its territory consisting of water (BIG, 2023), Indonesia has become a major node in aquatic GPNs, and is now the world’s second-largest fish producer (SEAFDEC, 2022) and a leading exporter of shrimp, blue swimmer crab, and carrageenan seaweed. Production of these commodities is dominated by household-scale producers, offering an informative case for understanding the dynamic implications of smallholder engagement with GPNs. Smallholders are embedded within different aquatic-based GPNs, the configurations of which are shaped by specific modes of lead firm governance interacting with the (horizontal) environmental and social conditions of production to shape livelihood trajectories. The following overview situates Indonesia’s position in these three GPNs, highlighting structures of industry governance and market dynamics affecting smallholder participation.
Shrimp (Litopenaeus vannamei)
Shrimp is Indonesia’s most globally integrated aquaculture commodity, organised through buyer-driven networks linking local exporters with major retailers and importers in the US, China, Japan, and the EU. In 2022, Indonesia ranked fourth among global exporters, accounting for 6.1% of global trade (when Indonesian exports were worth USD 1.5 billion; OEC, 2024). Global firms such as Red Chamber Group, Eastern Fish Co., Aqua Star, and Chicken of the Sea set product specifications, traceability protocols, and sustainability requirements that cascade down to producers through processing and trading tiers. These firms supply multinational buyers like Sysco, Costco, and Marubeni.
Small Japanese processing companies started investing in Indonesia during the 1990s, attracted by lower labour costs and proximity to raw materials (Hall, 2004). Today, the industry is characterised by fragmented vertical coordination: a few large firms operate integrated facilities encompassing feed mills, hatcheries, farms, processing units, and export facilities (though none directly in Pitu Sunggu), while most exporters rely on intermediaries. These exporters specialise in frozen and packaged shrimp tailored to specific buyer requirements, often entering ‘locked-in’ relationships with lead firms that demand strict product consistency and traceability. Many of these exporters are members of AP5I, the national association of fishery product processors and marketers, while commodity-specific coordination occurs through Shrimp Club Indonesia and multi-stakeholder platforms such as the Indonesia Shrimp Forum. These bodies/forums mediate dialogue among exporters, input suppliers, farmers, and regulators and advocate policy positions to government.
Upstream, regional traders play an important role, aggregating shrimp from local collectors and smallholder farmers. In villages such as Pitu Sunggu, most households operate earthen brackish ponds (tambak) of 0.5–1 ha – largely converted from paddy fields or mangroves during the 1990s boom. These ponds function as both productive and financial assets and are often leased or mortgaged to raise capital. Farmers stock fry from hatcheries or local suppliers and harvest after 2–3 months. Relationships are market-based, primarily determined by price, but these are often highly personalised. In the early years (1980s–1990s), exporters commonly used advance payments and short-term loans to secure traders’ loyalty and supply, but such practices have become increasingly rare as traders now prefer bank financing (helped by improved access to subsidised credit from the government).
Price pressures resulting from lead firms sourcing from a diversified global supply base have resulted in significant environmental degradation and a tendency to constantly shift geographically to lower-cost producers. The industry’s profitability has been subsequently undermined by ecological degradation, including nutrient runoff (Boyd and Massaut, 1999), tidal flooding and habitat loss caused by mangrove deforestation (Bosma et al., 2016), acid-sulphate soils (Mustafa and Ratnawati, 2012), and disease outbreaks (Kelly and Renukdas, 2020). Farmers in Pitu Sunggu respond to these environmental pressures by lowering stocking densities or shifting towards tilapia and milkfish for local markets. Sanitary and traceability requirements are enforced by lead firms and by the governments of importing countries, including mandatory HACCP and Health Certificates from the Indonesian Ministry of Marine Affairs and Fisheries (MMAF). Voluntary eco-labelling standards such as the Best Aquaculture Practices (BAP), Aquaculture Stewardship Council (ASC), and GlobalGAP schemes have also been promoted, yet remain largely inaccessible to smallholders due to high compliance costs (Sari, 2015; Wakamatsu and Wakamatsu, 2017).
Blue swimmer crab (Portunus pelagicus)
Indonesia has become the world’s largest exporter of BSC, producing nearly 40% of global output in 2020 (FAO, 2022). The US is the primary market, sourcing over half its imports from Indonesia in 2021 (NMFS, 2022). Global demand for this commodity surged in the 1990s when US seafood companies such as Phillips Foods, Chicken of the Sea, and Trans-Global began substituting BSC for the depleted Chesapeake Bay crab (Mesa et al., 2018). Phillips Food, the world’s largest crab meat company, have integrated upstream by establishing processing plants (for canning) in South Sulawesi and Java. By 2023, Indonesia’s BSC exports were valued at USD 448 million, involving roughly 90,000 fishers and 185,000 processing workers, mostly women (APRI, 2025).
The BSC GPN illustrates a multi-tiered, decentralised network with governance shared between major retailers, international importers, and canning factories (exporters). Major lead firms in the US, typically associated with the National Fisheries Institute Crab Council (NFICC), govern quality and (more recently) sustainability, while Indonesian exporters coordinate local procurement through village-based mini-plants and collectors. Prominent exporters are associated with APRI (Indonesian Blue Swimmer Crab Processors Association), currently representing 21 member companies operating 41 processing facilities across the country, most of which are in Java (APRI, 2025). APRI acts as a coordinating body for maintaining global networks (particularly with NFICC), implementing sustainability initiatives, and representing industry interests to Indonesian regulators, while promoting collective standards on traceability, quality, and natural resource management.
In Pitu Sunggu, integration with the BSC GPN in the early 2000s was facilitated by the establishment by traders of mini-plants, who also introduced new gear and post-harvest protocols, knowledge that these traders acquired from Makassar-based exporters. Mini-plants typically employ young women to process live crabs into crab meat (boiled, peeled, and graded by size and type) before being iced and sent to exporters for pasteurising and canning. Some larger mini-plants in Sulawesi and Java also source fresh crabs from other regions such as Kalimantan and even Papua. Fishers typically depend on simple technologies, including outrigger boats (gross tonnage of less than 5), traps or nets, family labour, and access to healthy and productive coastal ecosystems. Access remains relatively open but increasingly competitive, with stock depletion and habitat degradation reported in some localities. Patron–client relations remain central: mini-plants and traders provide loans or equipment, obligating fishers to sell their catch exclusively to them until debts are repaid. Prices fluctuate sharply with global demand. In 2022, prices fell from USD 5.2 to 1.7 per kg due to post-COVID oversupply in the US, causing significant hardship for fishers without reliable access to alternative livelihood resources.
Ecological pressures from overfishing and habitat loss have reduced yields. In response, global and domestic actors have initiated sustainability interventions. The NFICC, Sustainable Fisheries Partnership (SFP), 4 and APRI have collaborated on implementation of Fishery Improvement Projects (FIPs) in several sites across Indonesia (though not in our case study village) (see NFICC, 2022). These aim to improve traceability and promote sustainable catch practices (Käll et al., 2022). FIPs are also funded by the Walton Family Foundation, which is linked to Walmart. Although FIP participation is still limited to certain actors within GPNs, such as APRI, these partnerships show emergent attempts at environmental upgrading embedded within GPN governance.
Seaweed (Kappaphycus alvarezii and Eucheuma denticulatum)
Indonesia is the world’s largest producer of carrageenan-bearing red seaweeds, contributing the bulk of global supply – valued at USD 546 million in 2020 (Seisun and Zalesny, 2021). Global output expanded forty-fold between 2000 and 2020, driven by demand across the food, cosmetic, and pharmaceutical sectors (Cottier-Cook et al., 2022; Zhang et al., 2022). Around 83% of Indonesian exports (mostly dried raw material) are shipped to China (Soethoudt et al., 2022), which now serves as the world’s primary processing and trading hub. Companies such as Shanghai Brilliant Gum (BLG), FMC Biopolymer, and Zhenpai Hydrocolloids dominate the global refined carrageenan market, sourcing raw and semi-processed seaweed primarily from Indonesia and the Philippines, and supplying multinational end-users including Colgate-Palmolive, Griffith Foods, Kraft Heinz, and Nestlé.
GPNs connect Indonesian smallholders to multinational global food and chemical manufacturers, with BLG establishing a processing facility in South Sulawesi in 2017. Indonesian seaweed exporters are coordinated through ARLI (Asosiasi Rumput Laut Indonesia) and ASTRULI (Asosiasi Agar dan Karinagen Indonesia). ASTRULI (2025) currently represents about 22 processing firms producing semi-refined and refined carrageenan. While these associations advocate for policy support and trade facilitation, formal sustainability or certification initiatives are not evident. Nonetheless, as Indonesia prioritises development of its Blue Economy policy, the future of seaweed may bring new governance pressures akin to those seen in other aquatic sectors. Although seaweed is often portrayed as environmentally benign, issues of plastic waste, disease outbreaks, and water-quality decline are beginning to pose challenges.
In Pitu Sunggu, seaweed cultivation expanded rapidly after 2010. Farmers tie seedlings to nylon ropes in near-coastal waters and harvest them after 40–45 days, with seed quality (often provided by traders) influencing yields for subsequent cycles. Farming generally peaks during the dry season (calmer seas, higher salinity), while during the wet season activities often shift closer to shore or are temporarily suspended (Langford et al., 2024). Women play pivotal roles in seed-binding and drying, and this labour is now in demand across neighbouring villages. The seaweed production network is less vertically integrated than the crustacean sectors but is still often sustained through patron–client relationships in the village: many farmers receive advance payments from traders and, in return, are obliged to sell exclusively to them at prices below market rates until their debts are repaid. Local traders buy dried seaweed from farmers, assess its moisture content, and sell to Makassar-based exporters, some of whom remain partly financially-dependent on Chinese buyers.
Livelihood trajectories through engagement with GPNs
The previous section highlighted how lead firms in the three case study sectors expanded their supply base globally, establishing production networks reaching into low-cost commodity-source regions in Indonesia. Livelihoods in the case study village have been subsequently transformed as households initially engaged with these GPNs as petty commodity producers. The livelihoods framework is helpful for analysing how the (pre-existing) institutions of access to a range of livelihood assets were significant factors mediating livelihood pathways for different households within GPNs (a fundamental point made by Challies and Murray, 2011). This engagement presented new livelihood opportunities, but it benefited some households more than others. In this section, we now conceptualise these trajectories through processes of livelihood upgrading and downgrading.
We further introduce a dynamic element to GPN-livelihood interactions by highlighting how GPN engagement re-structures access to livelihood resources within rural communities. Livelihood trajectories depend on the resources available to particular households, the environmental conditions of the resource base and the presence of local institutions and regional assets, but these are also reshaped by the governance structures within the GPNs themselves and the strategies of downstream economic actors. We present evidence of six broad livelihood trajectories for commodity-producing households (Table 1), adapting the typology initially developed for firm-based upgrading (Humphrey and Schmitz, 2002), further adapted to smallholder contexts (Riisgaard et al., 2010), combined with social upgrading of labour (Barrientos et al., 2011; Rossi, 2019) and the livelihood risks and opportunities of environmental upgrading and downgrading (Krishnan et al., 2023). Our aim here is to present an analytical framework of livelihood upgrading better attuned to the social and environmental realities of household commodity producers in the global South.
Livelihood trajectories and global production networks.
Pathway 1: Commodity-supplier (same node) livelihood upgrading
The first livelihood upgrading pathway involves producers commencing, and then maintaining, their functional position as commodity producers, and improving their livelihood as a result. Upgrading can occur through increasing volume of production, improving product quality (hence per unit price), or enhancing productive processes, despite remaining at the same functional node (Riisgaard et al., 2010). Senior residents in the village recalled a period of food scarcity and dire poverty up until the late 1990s, which only began to change with the shrimp boom. Yati (a female seaweed farmer, early 50s) exemplified this transformation when she expressed, ‘In the past, even having a meal was difficult; now, many people can afford to build modern concrete houses thanks to seaweed’. Similar sentiments were echoed by Sarwan (male seaweed farmer, early-40s), ‘Years ago, people struggled to earn money and migrated to the city. Now, in the village, one can earn more through seaweed farming and crabbing’. Many household commodity suppliers have channelled increased incomes into improved livelihood outcomes, renovating timber houses into modern brick homes, owning cars and motorcycles, sending their children to university, and maintaining better diets. Others reinvested in productive assets and expanded production.
In the village, entry barriers for engaging with this pathway through seaweed farming and crabbing were initially relatively low – even for poorer and landless households (they were higher for shrimp producers, generally requiring prior land ownership). Collectors and traders within the seaweed GPN were particularly active in the village, disseminating cultivation technologies, providing access to finance and improved strains of seed to producer households, thus reconfiguring the availability of livelihood resources. Access to these resources, however, intersected with village-level institutions and relational mechanisms, benefiting better-connected individuals more than others. Seaweed cultivation, for example, required access to sea space itself and, initially, such access was relatively open to members of the village. However, as described by Rahmat et al. (2025), over time sea space became an increasingly scarce individually-owned commodity, as GPN engagement intensified with increasing profitability.
Differentiated access to livelihood resources (land, sea space, trader relationships, and technical knowledge) determines which households within the same community can capture upgrading opportunities. Drawing on Ribot and Peluso’s (2003) theory of access, access operates not merely as a precondition for GPN participation but as an active mechanism through which value is continuously captured and distributed unequally within rural communities. As natural resources became commodified (sea space) or degraded (crab stocks), early entrants with better social connections and resource endowments consolidated advantages while later entrants faced heightened barriers. This finding extends work on inclusion and exclusion in value chains (Bolwig et al., 2010; Vicol et al., 2019) by demonstrating how commodity-supplier upgrading becomes a process of agrarian differentiation. This highlights the need to avoid treating ‘smallholders’ as a homogeneous category, instead revealing how network governance structures interact with pre-existing inequalities to shape who benefits from commodity production and who remains marginalised.
Pathway 2: Functional livelihood upgrading
We observed livelihood improvements at the household level that can be understood in terms of ‘functional livelihood upgrading’, referring to households (who generally entered the GPN as commodity-suppliers) engaging in new value-adding functions, and capturing greater value, within the confines of a particular GPN. This process is illustrated through the following examples. Tatang (early 60s, a retired employee of a large state-owned enterprise) and his wife, Titi (mid 50s, a district-level government official and daughter of a large shrimp farmer), became involved in shrimp farming in the mid-1990s with tambak inherited from Titi’s parents. They employed people to work on their tambak while pursuing careers in government. In the early 2000s, they transitioned into shrimp trading, collecting shrimp from farmers and selling to regional traders (while continuing as producers). Due to their significant supply volumes (they were marking their boxes for traceability purposes), they garnered recognition from an exporter, who encouraged and supported them to upgrade their storage facilities to supply the exporter directly. In this case, upgrading was also facilitated by access to bank finance and social capital through their government networks. We observed similar upgrading trajectories experienced by two other shrimp farmers (becoming traders) in the village, both of whom came from relatively wealthy tambak families.
A contrasting example is demonstrated by Wawan (aged 53), who had more humble beginnings as a local fish trader operating on a bicycle. He started collecting fish and crab from fishers in the early 1990s for local markets. With increasing US demand for crab meat in the mid-2000s, he began supplying a crab processing plant in the district capital and gained knowledge and networks related to crab trading, processing, and export specifications. Then he started supplying crab directly to Phillip Seafood, who processed it and exported to the US. Phillip Seafood began financing him to increase supply and to expand his trading activities. In 2012, he secured a bank loan (using land as collateral) and established his own crab processing mini-plant in the village and began directly supplying crab meat to a range of exporters (including Phillip Seafood). In other cases, several seaweed farmers had become traders. Functional livelihood upgrading, involving a pathway from petty commodity producer to collector or local processor, is a widely held ambition for commodity producers, as it is often associated with significant livelihood improvements for the household involved.
This pathway requires prior access to certain resources, even if these were substitutable to a degree. Wawan relied on network-based social capital: ‘The fishers trusted me to bring their crab to the buyers [regional trader]and I paid them when I returned because I did not have enough money back then’. As this pathway requires the acquisition of new capabilities and knowledge (about standards, procedures, pricing, and regulations), these are often developed through relationships with downstream buyers who benefit from the enhanced cost-capability ratios of their suppliers. Buyer-promoted functional livelihood upgrading in the GPNs we studied was particularly prevalent in the early years of export-oriented trading, as lead firms sought to expand their supply base to meet rapidly growing global demand. While functional upgrading offers higher value capture, it is not accessible for all commodity producers, as competition, higher entry barriers, and risk all increase in downstream segments of GPNs. As such, this livelihood upgrading pathway was often pursued by households with pre-existing access to a range of livelihood resources (financial, human, and social capitals), which are shaped and mediated by local and regional institutions.
Functional livelihood upgrading in Pitu Sunggu reveals how the politics of access to buyer relationships and market knowledge become decisive factors in determining which households capture upgrading opportunities. The selectivity inherent in these processes – where households with better access to capital, land, and social networks were better positioned to adopt new functions – points to how functional upgrading pathways can contribute to differentiation within smallholder communities. This extends recent work on selective inclusion in value chains (Vicol et al., 2019) by demonstrating how upgrading itself becomes a mechanism through which existing inequalities are reproduced and amplified at the community level.
Pathway 3: Inter-sectoral livelihood upgrading
Inter-sectoral livelihood upgrading describes households who used their skills, knowledge, or accumulated capital to move horizontally away from a particular GPN, often engaging in ‘off-farm’ livelihood diversification. We heard from individuals who initially accumulated capital through commodity production (or trading), then used this to engage in (or invested in their children’s education to engage in) off-farm livelihoods (as teachers, storekeepers, hairdressers, and transport providers). Such trajectories depend upon opportunities elsewhere in the regional or national economy, highlighting the importance of the multiscalar institutional environment in shaping these trajectories (Neilson, 2025). In the case of households becoming village-based service providers and retailers, local demand is often generated by commodity-supplier households having enhanced disposable income (i.e. multiplier effects).
Capital, skills, and social networks obtained in one commodity-based GPN can sometimes be transferred to another. Imran, for example, de-coupled from the seaweed GPN (as a commodity producer) due to a lack of family labour after his son migrated to the city, instead concentrating his own resources on crab fishing and tambak farming, which were less labour intensive. Wawan (who had earlier engaged in functional livelihood upgrading) started seaweed trading in 2018 as seaweed prices increased and crab stocks dwindled, supplying exporters located near his crab buyers in Makassar. Three other households also shifted into seaweed trading (from trading shrimp and crab) and another fisher had become an active seaweed trader.
Many households who have engaged in intersectoral livelihood upgrading have achieved similarly positive value capture trajectories with those engaging in the functional upgrading pathway. They invested in physical assets (such as two-storey modern homes, cars, warehouses, trucks, and processing equipment), land, tambak and seaweed lokasi (often to lease-out), and education of their children. Many improved their social status by undertaking the haj pilgrimage and funding ceremonial activities in the village.
The precarity associated with environmentally-dependent commodity production, and vulnerability to volatile global commodity markets, often encourages households to seek such alternative livelihood opportunities, in processes akin to GVC ‘downgrading’ (Ponte and Ewert, 2009) or GPN ‘decoupling’ (Coe and Yeung, 2015). From a livelihood perspective, rural households pursue pluriactive strategies to minimise risk exposure and exploit shifting market opportunities, so it is not surprising that households seek to engage in intersectoral livelihood upgrading. Switching between GPNs as a commodity supplier was also relatively common, and petty commodity producers in the village were not locked-in to a particular GPN (as long as they maintained access to the required resources and were not financially indebted to traders).
Inter-sectoral livelihood upgrading shows that households can (and often do) achieve a ‘better deal’ through decoupling and horizontal mobility rather than a linear progression within a single network. The prevalence of inter-sectoral livelihood upgrading in Pitu Sunggu fundamentally reconceptualises what constitutes ‘successful’ GPN participation from a livelihood perspective, even if initial accumulation of financial resources was often facilitated by earlier GPN engagement as a commodity-supplier. Our research demonstrates that for smallholder households, such movements frequently represent rational livelihood strategies that enhance resilience and reduce vulnerability. The ability of households to move relatively fluidly between shrimp, crab, and seaweed GPNs – contingent on their access to productive resources and freedom from trader indebtedness – reveals the importance of maintaining ‘strategic flexibility’ in commodity production systems. This finding intersects with debates on pluriactivity (Rigg et al., 2016) by demonstrating how livelihood diversification enables livelihood improvements, while simultaneously providing crucial buffers against environmental and market shocks characteristic of coastal commodity production systems.
Pathway 4: Labour-based livelihood upgrading
Building on Barrientos et al. (2011), and the notion of social upgrading, this pathway describes those individuals who have undergone livelihood improvement through their participation as labour in a GPN. It is important to recognise (labour-based) social upgrading as a relative phenomenon, as a process of improvement in the conditions of workers as social actors. Regional participation in GPNs, especially in value-adding functions, generated new labour opportunities in the village (as crab meat processer workers, shrimp packers, transport workers, and seaweed binders). Wawan, for example, employed 12 women to process crab meat, and 4 men for seaweed-related work. Seaweed binding was in especially high demand in 2022, exceeding labour supply within Pitu Sunggu, and so was drawing in labour from neighbouring non-seaweed farming villages. We consider this a livelihood upgrading pathway when it constitutes an improvement from earlier periods when access to safe paid work was difficult, particularly for women and for fishing crew at sea. Seaweed binding, for example, is comparatively safe work that is done in shaded under-house spaces, in a relaxed social environment.
Exploitation is, of course, always a risk in unregulated labour markets (under-age labourers, underpayments, excessive work hours, poor safety) and conditions in some crab processing units appeared oppressive. While working as village-based labour in these GPNs is often pursued by individuals with few livelihood alternatives, this was not always the case and many village women reported that it fitted well within their household livelihood portfolios. Many of the seaweed binders employed in 2022 were operating within kinship and community-based relationships and values. Suryati (a woman in her mid-50s) told us: I usually get this (seed binding) job from relatives who are seaweed farmers. They text me and send me seed the next day if I agree. Then I invite my daughters and nieces, 4 to 5 people in total. We get paid based on how many ropes we finish. I can negotiate with them around the wage and how they will pay me. I can also decline if I don’t want to do it because I don’t have any debt or things like that. But I accept the job most of the time because I don’t have anything else to do.
Thus, seaweed binders did not (yet) necessarily constitute a separate class, positioned in opposition to their employer within this community. While possibilities exist for exploitation and exclusion (especially for those with no familial or social connections and for those who are reliant on labour agents), it can be considered social upgrading if it allows for some degree of flexibility, voice, and empowerment (Barrientos et al., 2011). It should be noted, however, that initial fieldwork took place during a period of relatively high seaweed prices, and that (by 2024) prices had mellowed, along with demand for seed-binding labour. Access to these labour opportunities, however, had allowed individuals and households to improve incomes and enhance livelihoods by heightened financial access to daily needs (buying varied foods, providing children with pocket money, and supporting their basic educational needs).
Labour-based livelihood upgrading reveals the complex and contingent nature of social upgrading in smallholder GPN contexts. The seaweed binding example demonstrates that labour opportunities generated by regional GPN participation need not conform to conventional employer-employee relations characterised by exploitation and class antagonism. Instead, these labour pathways often emerged within embedded kinship and community relationships, offering women, in particular, a degree of flexibility, voice, and autonomous income generation that represents genuine livelihood improvement relative to previous livelihood options. However, this pathway also indicates the precarious foundations of such improvements, with labour-based upgrading opportunities tightly coupled to global commodity price fluctuations. This highlights a key contribution to social upgrading literature (Barrientos et al., 2011; Rossi, 2019): in smallholder production landscapes, the very category of ‘labour’ is fluid and relationally constituted, shifting between unpaid household work, reciprocal kin-based arrangements, and more formalised wage employment depending on market conditions and seasonal demand.
Pathway 5: Upgrading through improved network coordination
A fifth pathway of livelihood upgrading may occur through improved vertical and horizontal coordination within and between GPN actors (following Riisgaard et al., 2010). In South Sulawesi, improved coordination was evident through trust-based relationships between GPN actors. Coordination between producers, traders, and exporters was generally built on enduring relations of trust, reliability, familiarity, and reciprocity that emerged over years of repeated transactions rather than formalised through written contracts. Traders and exporters described ‘dedicated suppliers’ who consistently delivered the required quality and volumes and are often rewarded with advance payments, small loans, or preferential access. Such relationships involved direct assistance from exporters in obtaining the HACCP and health certificates required for export. Interlocking ‘contracts’ involve interest-free loans from downstream buyers that improve supply chain efficiencies, stabilise prices, and facilitate technological transfer.
Elsewhere in Indonesia, network coordination was also improved through programmes initiated at a broader transnational scale, as evident in our earlier discussion of sustainability initiatives (FIPs) in the BSC industry. Although still fragmented and geographically uneven, these efforts have begun to shape GPN structures in some producing communities. FIPs, especially on the island of Java, have acted to strengthen fisher associations and the transfer of technical support, knowledge, and physical resources from downstream buyers to fishing communities. Fisher associations (kelompok nelayan) have been formed to participate in FIPs and have gained access to technical and materials assistance from lead firms as a result. They have also been formed as conduits for the distribution of government assistance. Horizontal coordination among small producers in our case study village in Sulawesi, however, remained limited. Collective marketing of aquatic produce is not common, but shrimp farmers in Pitu Sunggu reported sometimes pooling harvests when selling to large traders to reduce transport costs and secure better prices.
While livelihoods frameworks have long recognised social capital as a livelihood resource (Carney, 1999; Scoones, 1998, 2015), our findings reveal the ambivalent character of relational resources in GPN contexts. Trust-based relationships between producers, traders, and exporters enabled household access to credit, technical knowledge, and preferential market access, while FIPs fostered both horizontal and vertical coordination. Yet these same coordinating mechanisms are inherently selective and exclusionary: patron-client relationships privilege those with existing social connections and reputational capital, while FIP participation is currently concentrated on Java rather than Sulawesi. Coordination itself is not a neutral technical process, but a political one that actively constitute the boundaries between inclusion and exclusion, whether coordination mechanisms are market-based (trader relationships), associational (kelompok nelayan), or governance-driven (sustainability standards). This extends Natarajan et al.’s (2022) emphasis on the politics of access by revealing how enabling social institutions can simultaneously function as gatekeeping mechanisms that concentrate benefits among already-advantaged households. For GPN scholarship, this underscores the necessity of analysing not just whether coordination improves but for whom and at whose expense.
Pathway 6: Livelihood downgrading
Not all households in Pitu Sunggu experienced livelihood improvements through GPN participation. We observed multiple mechanisms through which GPN integration produced livelihood downgrading, understood as deteriorating livelihood conditions, reduced autonomy, or heightened vulnerability relative to previous livelihood strategies. Many smallholders initially experienced livelihood gains during periods of high prices, plentiful resource access, and active buyer support. However, downgrading trajectories emerged as intensified competition over finite resources, ecological degradation, and volatile market conditions eroded these early gains. Declining crab stocks, competition over sea space, and the enclosure of previously open-access resources disproportionately affected poorer households lacking land, boats, or social connections to traders and village elites.
Environmental degradation resulted from mangrove loss due to tambak expansion, overfishing, or poor tambak management, has diminished ecosystem services, reduced yields and increasing livelihood vulnerability (see Krishnan et al., 2023, on how similar processes amongst horticultural producers in Kenya were described as ‘environmental downgrading’). Crab-dependent households faced declining catches due to weak enforcement of catch limits and habitat disruption, forcing some into more precarious activities like informal labour, petty trading, or seasonal migration.
Ineffective environmental governance was marked by fragmented sustainability initiatives and limited enforcement, and this has, thus far, failed to protect resource bases or ensure equitable participation. Environmental upgrading can be an outcome of GPN participation when lead firms contribute to improved environmental conditions of production through sustainability initiatives, typically driven by dwindling supply or external pressures from NGOs and governments (De Marchi et al., 2019). While these outcomes were not (yet) evident in Pitu Sunggu, there was some indication that lead firms were beginning to more actively engage in ensuring the sustainability of their supply base (and similar trends are already evident in other commodity-based value chains such as coffee, Neilson, 2025). Processes of environmental upgrading (and downgrading) are critical for understanding opportunities shaping livelihood outcomes amongst resource-dependent, commodity-producing households.
The commodification of sea space for seaweed farming (Rahmat et al., 2025) further illustrates emerging agrarian differentiation. Initially accessible to most households, seaweed cultivation areas have become privatised and contested, with access increasingly governed by informal institutions favouring those with historical claims or elite connections. Latecomers and migrants now face exclusion, reinforcing patterns of inequality. These dynamics reflect broader processes of asset accumulation and class formation, as observed in other Indonesian resource frontiers (Li, 2014). These observations are made without idealising earlier (precarious) livelihoods in the village (as widely expressed by older interview respondents), although the growing prosperity of some households through GPN participation has certainly exacerbated the relative poverty of others.
Engagement in one GPN can affect participation in another. The conversion of rice fields to shrimp ponds eliminated traditional sharecropping arrangements, narrowing livelihood options for landless families. Crab fishers, and poor households relying on catching ambaring in shallow coastal waters (without a boat), had their access affected with the enclosure of sea space for seaweed farming. Fluctuating global prices compound these challenges. The 2022 crab price crash severely impacted fishers without diversified income streams or access to alternative resources. Households lacking patron–client ties or financial buffers were especially vulnerable, highlighting how uneven institutional access mediates exposure to market volatility, demonstrating how access mechanisms are infused by structural and relational bundles of power (Ribot and Peluso, 2003). Market-based downgrading occurred when households became locked into unfavourable trading relationships, particularly through credit arrangements with traders that reduced their market flexibility and price negotiation power.
Many poorer households accessed social protection programmes from the government (such as food assistance and conditional cash transfers) that partially protected them from the more severe effects of GPN-induced livelihood downgrading (thus enhancing livelihood resilience). However, the ability to use state development initiatives (such as the Village Fund or targeted sectoral supports) as a pathway for wealth accumulation were unevenly distributed and often favoured local elites. For many, livelihood downgrading was not simply a reversal of earlier gains, but a structural outcome of how GPN governance interacts with local ecologies and institutions to determine who captures value – and who bears the costs – of global market integration.
Livelihood downgrading thus underscores the uneven politics of access through which GPN participation can simultaneously generate accumulation for some and exclusion for others. This pathway connects to recent work on environmental downgrading (De Marchi et al., 2019; Krishnan et al., 2023; Ponte et al., 2023) but extends it by demonstrating how environmental, market, and social processes of downgrading are deeply interconnected in smallholder contexts. By revealing upgrading as a contested, evolving, and even reversible process shaped by local ecologies, resource commodification, and unequal institutions of access, our analysis shows that the politics of access (Ribot and Peluso, 2003) not only determines who benefits from GPN participation but fundamentally shapes who bears the costs, risks, and environmental burdens of export-oriented commodity production.
The coexistence of these diverse pathways within Pitu Sunggu, with some households experiencing considerable gains through functional or inter-sectoral upgrading while others faced exclusion or downgrading, illustrates how GPN participation reshapes rural economies in profoundly uneven ways. This unevenness is embedded in the very mechanisms through which GPNs organise production, distribute resources, and govern participation. Access to upgrading pathways is mediated by households’ positioning within local and extra-local institutions, their control over productive resources, and their relationships with traders and other GPN actors. Together, these six pathways provide a typology through which the relational dynamics between GPN governance and local politics of access and influence can be systematically examined.
Conclusion
Recent scholarship has shown that the developmental impacts of GPN participation in smallholder-based production landscapes unfold through dynamics distinct from firm-to-firm engagement, demanding a more grounded understanding of household livelihood trajectories (Bolwig et al., 2010; Neilson and Shonk, 2014; Riisgaard et al., 2010; Schoneveld and Weng, 2023; Vicol et al., 2019). Building on and extending this work, we have argued that upgrading outcomes in such contexts emerge through household livelihood strategies that are contingent upon institutions of access and influence. In this sense, GPN governance itself can be viewed as a livelihood resource – one that reshapes how values, opportunities, and risks are distributed within rural communities in uneven ways.
By extending existing upgrading frameworks (see Barrientos et al., 2011; De Marchi et al., 2019; Humphrey and Schmitz, 2002; Krishnan et al., 2023; Rossi, 2019) and further adapting them to smallholder contexts (Riisgaard et al., 2010), we have introduced livelihood upgrading as a conceptual framework that foregrounds households – rather than firms – as the unit of analysis. We define livelihood upgrading as a process whereby smallholder households improve their access to livelihood resources through GPN participation, while being differentially affected by their positioning within institutions of access and influence. Critically, this framework attends to how upgrading and downgrading processes unfold simultaneously within the same communities and through the same network structures, producing divergent household trajectories rather than uniform developmental outcomes. Applying this concept to a multiple-resource commodity producing landscape, we identified six livelihood upgrading pathways: commodity-supplier, functional, inter-sectoral, labour-based, upgrading through improved coordination, and downgrading. These pathways reveal not only the diversity of possible outcomes but the mechanisms through which GPN participation contributes to processes of agrarian differentiation within rural communities.
These six pathways capture the diversity of outcomes that emerge as GPNs become embedded within rural communities. While commodity-supplier upgrading offered broader but more volatile benefits accessible to many households, functional upgrading was concentrated among those with better access to capital, land, and social networks. Inter-sectoral upgrading revealed how households strategically used GPN participation as a stepping stone towards diversification rather than deepening network embeddedness. Labour-based upgrading underscored the gendered, informal, and kinship-embedded character of work in smallholder GPNs, while improved coordination through patron-client relationships or sustainability governance created additional but highly selective opportunities. Conversely, environmental degradation, resource contestation, market volatility, and exclusionary institutions precipitated livelihood downgrading for others. The simultaneous presence of these diverse trajectories within a single village reveals how GPN governance structures interact with local politics of access to produce fundamentally uneven developmental outcomes. The embedding of Pitu Sunggu within three GPNs provided some buffer against commodity price fluctuations, though this multi-network engagement may not be available in all smallholder contexts.
Importantly, livelihood upgrading is neither linear nor inevitable. It is a dynamic process shaped by the entanglement of GPN participation with local politics of influence and access, and by ecological constraints. Outcomes depend not only on material resources, but also on the social, ecological, and institutional configurations through which those resources are mobilised (the relational aspect of such resource access is highlighted by Natarajan et al., 2022). Our evidence reveals how the same network governance structures that enable livelihood improvements for some households simultaneously reproduce or intensify marginalisation for others, often within the same village. The politics of access (to land, sea space, credit, trader relationships, technical knowledge, markets, and social networks) determines not whether upgrading occurs but who captures its benefits and who bears its costs. By presenting GPN structures as potential avenues of access to livelihood resources, this paper advances a more grounded understanding of how GPN governance is experienced, negotiated, and contested at the household level.
In doing so, we contribute to bridging GPN and livelihoods literatures, responding to calls for more nuanced, context-sensitive approaches to upgrading in smallholder economies. Livelihood upgrading bridges these bodies of work by foregrounding the relational, political, and ecological dimensions through which values and opportunities are captured and distributed in smallholder economies. Recognising that upgrading and downgrading are coexisting and evolving dynamics, this study provides greater nuance to narratives that present a more optimistic rendering of smallholder participation in GVC/GPNs (see Humphrey and Navas-Alemán, 2010; Stoian et al., 2016) and instead highlights the uneven geographies of opportunity, accumulation, and exclusion that characterise smallholder engagement with global markets.
Looking forward, the concept of livelihood upgrading opens several productive directions for GPN scholarship. First, it provides an analytical framework for examining how GPNs interface with smallholder economies in ways that generate simultaneously intra-community differentiation and aggregate livelihood change. This is a dynamic inadequately captured by either firm-centric upgrading frameworks or community-level poverty assessments. Second, by foregrounding the politics of access, this approach reveals how network governance structures do not simply overlay existing social relations but actively reconfigure them, transforming patterns of resource control, labour relations, and community solidarity in ways that demand careful empirical attention. Third, the framework’s attention to environmental dimensions (resource degradation, climate volatility, ecosystem decline) connects productively with emerging work on environmental upgrading and downgrading (Krishnan et al., 2023; Ponte et al., 2023) while extending it to show how ecological processes intersect with livelihood opportunities. Finally, this approach underscores the necessity of multi-scalar analysis that traces connections between household decision-making and community-level resource politics with regional and global production networks. Only through such grounded, multi-scalar frameworks can GPN scholarship adequately explain the developmental implications of smallholder integration into global production systems and inform policy interventions capable of enhancing benefits while mitigating the differentiating effects of smallholder GPN participation more broadly.
Footnotes
Acknowledgements
The authors are grateful for the support and hospitality of the local communities in Pitu Sunggu Village. We acknowledge the support of the Partnership for Australia–Indonesia Research (PAIR) project, and thank in particular Zulung Walyandra and Radhiah Ruhon for their assistance during fieldwork in Pangkep. We are especially grateful to Aqilah Nurul Khaerani Latif and Mustakim Saleh for their substantial contributions and sustained support throughout the fieldwork in Makassar and Pangkep.
The authors also acknowledge the Indonesian Endowment Fund for Education (LPDP), Ministry of Higher Education, Science and Technology of Indonesia, for support provided under the EQUITY Program (Contract No. 4298/B3/DT.03.08/2025).
Funding
The authors disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This study is funded by: (1) Department of Foreign and Trade Australia through Australia Awards Scholarship for the first author; (2) The University of Sydney through Postgraduate Research Support Scheme for the first author.
Declaration of conflicting interests
The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.