Innovation for Inclusive Value Chain Development
Value chain development (VCD) aims to address poverty by strengthening linkages among agricultural value chain actors (producers, laborers, traders, processors, retailers, and consumers), allowing those actors to take better advantage of market opportunities.
Participation in value chains is particularly important for smallholders as it can lead to increased income, more secure linkages to markets, and access to new technologies and services to spur agricultural production. However, despite the proliferation of VCD in recent years, there is relatively little research available regarding how to implement value chain approaches in different contexts and how best to evaluate value chain development and innovation.
A recent book published by IFPRI, Innovation for Inclusive Value-Chain Development, aims to fill this gap by assessing how agricultural value chains can be improved, particularly value chains that include smallholders. The book discusses numerous VCD case studies, highlights opportunities and challenges for VCD innovation, and discusses potential policy implications and avenues for future research. Part 1 provides an overview and discusses the main findings of the book.
Part 2 contains four chapters that discuss the opportunities created by VCD and the challenges faced by smallholders in participating in VCD. One of the main challenges faced by smallholders in participating in value chains is a lack of access to resources (such as land, credit, technical advice, basic knowledge of the market system, and current information on market prices and conditions), which restricts their capacity to invest, expand their market surplus, and add value to their produce. This lack of resources and endowments among smallholders suggests that poor households require a minimum amount of assets in order to successfully participate in VCD and highlights the importance of policies and programs that strengthen farmer associations and collective marketing.
Part 3 focuses on the integration of agricultural innovation and VCD. For instance, Chapter 6 analyzes the transformation of smallholder cattle production in rural Vietnam. In this study, smallholder farmers were able to take advantage of the rising demand for meat in urban centers and transform cattle production from a traditional system to a more intensive, stall-fed system that supplies quality meat to urban markets. By adopting agricultural innovation practices that boosted smallholder outputs, farmers were thus able to participate more successfully in value chains.
A number of the chapters in Part 3 also focus on the potential of innovation platforms and multi-stakeholder platforms for supporting VCD. These case studies indicate that bringing stakeholders together in a joint platform can result in new products and processes that could not have been achieved otherwise and that benefit poor farmers. For instance, Chapter 8 shows that the development of multi-stakeholder platforms in a study area in Peru helped smallholder farmers sell more potatoes, leading to increases in smallholder incomes. Additionally, the multi-stakeholder platforms helped farmers supply potatoes to processor organizations, thus enabling them to become integrated into the broader market system.
Part 4 focuses on issues related to the evaluation of complex interventions aimed at inclusive VCD. These chapters cover the identification of the economic impacts of VCD implementation, the use of experimental evaluation approaches, and quantitative tools for measuring gender differences within value chains. For instance, Chapter 14 explores the use of quantitative tools to measure gender differences within value chains, arguing that using such tools to study gender-related questions in a value chain context can encourage gender inclusion and promote economic growth in developing countries. Four quantitative tools are proposed to help researchers identify value chain bottlenecks, with the goal of creating more effective and inclusive policies. For instance, one of the proposed tools calculates gender wage gaps along value chains and can also be used to assess the extent to which observed gender wage gaps correspond to observable characteristics such as demographics or job characteristics. Providing data on where gender wage gaps exist and identifying some of its causes can help design appropriate policies that tackle these gaps. Agricultural innovation and VCD processes are highly complex and require complex and context-specific interventions. Based on the studies included, the book argues that there are a number of common characteristics found among successful interventions. Generally, interventions that combine agricultural innovation and VCD experience significant success, with the two intervention arms generally reinforcing each other. Similarly, multi-stakeholder platforms that foster commercial, technical, and institutional innovation have had more significant and lasting impacts than those focusing on governance and coordination issues. Third, the studies suggest that effective participation in VCD requires a minimum set of assets, and the main benefits of VCD for the poorest rural groups come from expanded employment in production, processing, and marketing activities and in reduced prices of agricultural products. VCD interventions have been most successful when economic and policy environments have supported rural enterprise development or when appropriate policy changes accompanied the interventions.
The book proposes a number of priorities for future research, including: the impact of smallholders’ assets on their to participate in and benefit from VCD interventions, the benefits and drawbacks of membership in VCD platforms, what makes VCD interventions effective, how to scale up successful VCD interventions, and the application of a gender lens in VCD initiatives.