Value Chain Development

Value chain development (VCD), a relatively new approach to agricultural development, is gaining prominence and becoming the centerpiece of agricultural development strategies. The concept of value chains, which was developed in the 1960s and 1970s to aid the analysis of mineral exporting countries, became widely known and popularized in the 1980s as a business tool to analyze and assess upgrading of technologies and processes in individual firms before being applied more broadly to supply chains and distribution (Girvan, 1987; Porter, 1985; Kaplinsky, 2000). The original concept rests on the idea that a firm can develop strategies to improve and maintain its competitive advantage by disaggregating its core activities and quantifying the value of each activity (Stamm, 2004). This concept has been extended beyond individual firms to whole supply chains and distribution networks. It is a relatively new approach to agricultural development (Altenburg, 2007), although the thinking about entire chains from production to consumption and increasing the share of value captured by farmers is not new to agricultural development. However, VCD is increasingly being seen more specifically as an important approach to agricultural development that explicitly recognizes the role of the private sector and that agricultural markets and institutions rarely function efficiently. The emerging VCD-oriented approaches go somewhat further from interventions that develop input and outputs markets in general to making more focused interventions to improve the competitiveness of selected commodities.

While the approach offers valuable tools for identifying points for intervention (Webber and Labaste 2009, for example), there is less clarity on what the interventions should be. VCD is expected to involve actions such as facilitating changes in behavior, transforming relationships, targeting leverage points and empowering the private sector. (Microlinks) ACDI/VOCA’s strategy suggests that addressing major constraints and opportunities in value chains includes activities such as facilitating access to inputs, or strengthening delivery of business and financial services or increasing access to higher value markets. (Campbell) A wide range of interventions are employed to achieve the above that would strengthen the competitiveness of value chains.

Value Chain Development –Case Studies

The objective of this research is to conceptualize value chain development by understanding the paths through which various types of VCD interventions are expected to change the operations of and the relationships between economic agents in a value chain to make the chain more competitive. The program seeks to gain insights from this research on approaches to design appropriate interventions as well as how to monitor and evaluate the benefits from value chain interventions. In order to learn from cases both inside and outside Ghana, a background paper will first be developed to review the literature and contextualize this work. This research will be based on ten to fifteen case studies of ongoing or completed value chain interventions for selected crops in Ghana. The crops included will represent a range of value chains that serve domestic consumption of processed and unprocessed commodities, export of fresh and processed outputs, and processing for industrial purposes, including the three Feed the Future crops (maize, rice, and soybean). The case studies will characterize input and output markets, including the nature of transactions before and after interventions, and examine the rationale for interventions, the nature of changes in production and rocessing technologies, profitability of operations, and welfare of producers.

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