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Transcript of Value Chain
BACKGROUND AND CONCEPT
VALUE CHAIN (VC)
COMMODITY VALUE CHAIN DEVELOPMENT PROJECTS
HOW TO DO
A Value Chain (VC) is a vertical alliance to bring a product from the initial input supply stage, through the various phases of production up to final consumption.
The expression “farm-to-fork” is often used to describe food VCs.
Every VC serves one specific market
Farmers are linked to the needs of consumers.
Rural population is heterogenous.
A VC approach tends to work with the better integrated segment of the rural population. This bears the risk of leaving out the poorest segments. Smart targeting and employment generation can mitigate this risk.
Stylised VC Map
VC UPGRADING STRATEGIES
Organised and commercially
Subsistence oriented poorly organized producers
Identify how VC actors can meet:
Financial needs: working and investment capital.
Non-financial needs: business development services, technical assistance, extension.
Warehouse receipt financing
Business Development Services (BDS)
Brokerage of contacts/legal advice
Technical assistance to producers organizations or lead actors
Technical assistance to financial institutions
Gender-specific roles and responsibilities along a VC affect the chain’s functioning. Inequalities can prevent a chain from working efficiently and jeopartize development strategies.
Nutrition and Food Security
VC development should consider impacts on nutrition and food security (availability, affordability, acceptability, nutritional quality). VCs can be made more nutrition sensitive by focusing on nutrient-rich foods and promoting actions that specifically seek to improve dietary quality and nutritional status.
Environmental risk management
Environmental risk management: take climate and environmental criteria into account during VC selection, assess risks at various knots in the VC and identify mitigation strategies.
ROLES AND RESPONSIBILITIES
PRIVATE SOCIAL SYSTEM
A VC constitutes a private social system in which VC actors interact according to cultural norms and their own interests and negotiating power.
Provides conducive business environment
Project Management Unit
IFAD entry point to project, might have
limitation to work with private sector actors
External service providers
Provide technical and business services (including applied research)
POLICIES AND THE
Well-functioning agricultural markets and VCs rely on supportive policies and a conducive regulatory environment.
M&E OF VC DEVELOPMENT
Indicators for the baseline and subsequent M&E may be either qualitative or quantitative.
Percentage of IFAD projects
with a Value Chain component
IFAD VALUE CHAIN
PROJECT ENTRY POINTS
VC Selection & Mapping
Identification of opportunities for and constraints to VC upgrading, based on the mapping exercise and analysis of target groups.
VC Upgrading Strategies
Process/product upgrading: “doing things bigger or better”.
Functional upgrading: target group takes on new functions (e.g. processing).
Upgrading of coordination and business models: strenghtening vertical and horizontal linkages.
Distribution of 500 million small farmers in the world on a pyramid.
Who will drive the VC development process?
Finance can be provided within the VC or from financial institutions (Banks, MFIs).
Gender - Nutrition - Risk Management
The VC development process
Stakeholders roles and responsibilities should be clearly discussed and defined early on.
Can take on service provision/extension functions and chain coordination
Associations of Traders and retailers
Can help steering the VC development
Financial institutions and insurance
Ensure that linkages to finance and insurance are provided.
National Policy Context
Identify policy gaps during VC analysis and mapping
Identify agents responsible for policy formulation
Analyse existing form of policy dialogue (including with partners)
Analyse and highlight policy issues
Address needs, such as capacity building, exchange programmes, etc.
Define responsibilities for management and implementation
Link actions with M&E, knowledge management and policy agendas
List stakeholders to engage with for policy dialogue
Define entry points or platforms/ networks that the project can use to engage in the process
M&E needs to monitor the full chain, not only production stage.
Indicators can capture linkages between chain actors, e.g. “% of produce meeting market requirement”.