Trust-building processes in agri-food value chains: Perspectives from Thailand

• Trust is key in coordination of Thai smallholder-based retailer-driven value chains. • Actors invest in trust building and maintenance not assets for business development. • Trust-based ties stabilize trade but reinforce power asymmetries. • The combination of trust and power asymmetry leads to lock-in, limiting upgrading. • Relational governance calls for new strategies in informal agri-food markets. This article builds on perspectives from relational economic geography to delve deeply into the micro-social processes that underpin market coordination. We examine how trust functions as a central coordinating mechanism in smallholder-based agri-food value chains in Thailand. Drawing on qualitative interviews with actors from the different segments of the value chains for onions and Chinese cabbage, two major crops in Thailand, the study explores how interpersonal relations, inherited networks and socio-cultural norms underpin economic transactions. Instead of viewing trust as a relational supplement to governance structures, the article argues that trust constitutes a primary mode of coordination in hybrid and informal market systems. While trust-based relations enable continuity and stability in volatile agricultural markets, they also reinforce dependency and power asymmetries, particularly for upstream actors. Trust can facilitate upgrading by reducing uncertainty and enabling access to resources, yet the results show that reinforced dependencies and power asymmetries inhibit innovation and investment into business development through lock-in effects. This results in limited opportunities for upgrading and economic development, particularly among smallholders and the smaller traders. The findings challenge conventional typologies of global value chains by highlighting the micro-social foundations of coordination and the double-edged nature of trust in shaping upgrading opportunities. We argue that there is a need to understand these micro-social processes of market coordination and value chain governance in order to address uneven patterns of economic development, particularly among smallholders and traders in agri-food value chains.