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Value chain development and rural poverty reduction: Knowledge gaps and a potential role for ICRAF

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Value chain development and rural poverty reduction: Knowledge gaps and a potential role for ICRAF

Value chain development and rural poverty reduction: Knowledge gaps and a potential role for ICRAF

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  • In particular, understanding why poor people stay poor for long periods of time requires a close look at the underlying structural dimensions that may undermine people’s attempts to escape poverty (Carter and May 2001, Adato, Carter and May 2004, Bevan 2004, du Toit 2005). This is a key point. In many cases, particularly in the vulnerable insecure low-skill labour market, brief spells of improved income should not be seen as changing people’s structural poverty status. Though an increase of a few hundred Rand probably does improve welfare, people can hardly be said to have escaped poverty if the ways in which they are positioned in society by their access to resources and their insertion into social relations have not been changed. Here, it is insightful to comment on the concept of vulnerability. This term, which is often used rather fast and loose in the literature, needs to be used with some care. Vulnerability cannot simply be understood, as econometric studies sometimes do (e.g. Bhorat et al 2001), in terms of poverty-sensitive segmentation of the labour market in order to identify who is ‘ vulnerable to poverty’. Such an approach is highly non-dynamic and misses the longitudinal and temporal aspects of vulnerability, reducing it simply to the likelihood of someone being in a particular income segment at a particular moment.
  • In particular, understanding why poor people stay poor for long periods of time requires a close look at the underlying structural dimensions that may undermine people’s attempts to escape poverty (Carter and May 2001, Adato, Carter and May 2004, Bevan 2004, du Toit 2005). This is a key point. In many cases, particularly in the vulnerable insecure low-skill labour market, brief spells of improved income should not be seen as changing people’s structural poverty status. Though an increase of a few hundred Rand probably does improve welfare, people can hardly be said to have escaped poverty if the ways in which they are positioned in society by their access to resources and their insertion into social relations have not been changed. Here, it is insightful to comment on the concept of vulnerability. This term, which is often used rather fast and loose in the literature, needs to be used with some care. Vulnerability cannot simply be understood, as econometric studies sometimes do (e.g. Bhorat et al 2001), in terms of poverty-sensitive segmentation of the labour market in order to identify who is ‘ vulnerable to poverty’. Such an approach is highly non-dynamic and misses the longitudinal and temporal aspects of vulnerability, reducing it simply to the likelihood of someone being in a particular income segment at a particular moment.
  • In particular, understanding why poor people stay poor for long periods of time requires a close look at the underlying structural dimensions that may undermine people’s attempts to escape poverty (Carter and May 2001, Adato, Carter and May 2004, Bevan 2004, du Toit 2005). This is a key point. In many cases, particularly in the vulnerable insecure low-skill labour market, brief spells of improved income should not be seen as changing people’s structural poverty status. Though an increase of a few hundred Rand probably does improve welfare, people can hardly be said to have escaped poverty if the ways in which they are positioned in society by their access to resources and their insertion into social relations have not been changed. Here, it is insightful to comment on the concept of vulnerability. This term, which is often used rather fast and loose in the literature, needs to be used with some care. Vulnerability cannot simply be understood, as econometric studies sometimes do (e.g. Bhorat et al 2001), in terms of poverty-sensitive segmentation of the labour market in order to identify who is ‘ vulnerable to poverty’. Such an approach is highly non-dynamic and misses the longitudinal and temporal aspects of vulnerability, reducing it simply to the likelihood of someone being in a particular income segment at a particular moment.
  • In particular, understanding why poor people stay poor for long periods of time requires a close look at the underlying structural dimensions that may undermine people’s attempts to escape poverty (Carter and May 2001, Adato, Carter and May 2004, Bevan 2004, du Toit 2005). This is a key point. In many cases, particularly in the vulnerable insecure low-skill labour market, brief spells of improved income should not be seen as changing people’s structural poverty status. Though an increase of a few hundred Rand probably does improve welfare, people can hardly be said to have escaped poverty if the ways in which they are positioned in society by their access to resources and their insertion into social relations have not been changed. Here, it is insightful to comment on the concept of vulnerability. This term, which is often used rather fast and loose in the literature, needs to be used with some care. Vulnerability cannot simply be understood, as econometric studies sometimes do (e.g. Bhorat et al 2001), in terms of poverty-sensitive segmentation of the labour market in order to identify who is ‘ vulnerable to poverty’. Such an approach is highly non-dynamic and misses the longitudinal and temporal aspects of vulnerability, reducing it simply to the likelihood of someone being in a particular income segment at a particular moment.
  • In particular, understanding why poor people stay poor for long periods of time requires a close look at the underlying structural dimensions that may undermine people’s attempts to escape poverty (Carter and May 2001, Adato, Carter and May 2004, Bevan 2004, du Toit 2005). This is a key point. In many cases, particularly in the vulnerable insecure low-skill labour market, brief spells of improved income should not be seen as changing people’s structural poverty status. Though an increase of a few hundred Rand probably does improve welfare, people can hardly be said to have escaped poverty if the ways in which they are positioned in society by their access to resources and their insertion into social relations have not been changed. Here, it is insightful to comment on the concept of vulnerability. This term, which is often used rather fast and loose in the literature, needs to be used with some care. Vulnerability cannot simply be understood, as econometric studies sometimes do (e.g. Bhorat et al 2001), in terms of poverty-sensitive segmentation of the labour market in order to identify who is ‘ vulnerable to poverty’. Such an approach is highly non-dynamic and misses the longitudinal and temporal aspects of vulnerability, reducing it simply to the likelihood of someone being in a particular income segment at a particular moment.
  • In particular, understanding why poor people stay poor for long periods of time requires a close look at the underlying structural dimensions that may undermine people’s attempts to escape poverty (Carter and May 2001, Adato, Carter and May 2004, Bevan 2004, du Toit 2005). This is a key point. In many cases, particularly in the vulnerable insecure low-skill labour market, brief spells of improved income should not be seen as changing people’s structural poverty status. Though an increase of a few hundred Rand probably does improve welfare, people can hardly be said to have escaped poverty if the ways in which they are positioned in society by their access to resources and their insertion into social relations have not been changed. Here, it is insightful to comment on the concept of vulnerability. This term, which is often used rather fast and loose in the literature, needs to be used with some care. Vulnerability cannot simply be understood, as econometric studies sometimes do (e.g. Bhorat et al 2001), in terms of poverty-sensitive segmentation of the labour market in order to identify who is ‘ vulnerable to poverty’. Such an approach is highly non-dynamic and misses the longitudinal and temporal aspects of vulnerability, reducing it simply to the likelihood of someone being in a particular income segment at a particular moment.
  • Transcript

    • 1. Value chain development and rural poverty reduction Knowledge gaps and a potential role for ICRAF Staff Seminar Series ICRAF HQ, Nairobi, Kenya February 28, 2012 Jason Donovan, Ph.D. ICRAF – Latin America
    • 2. Content
      • 1) What we know and think we know about the poverty impacts of value chain development
      • 2) Knowledge gaps
      • 3) The “5Capitals” assessment tool
      • 4) Lessons learned in the design of 5Capitals
      • 5) Proposal for ICRAF’s value chain work in CRP2
      • Note: VCD = value chain development VC = value chain
    • 3. What we know about VCD and poverty reduction
        • Beginning in 2000s: proliferation of VCD in response to poverty-related MDGs
        • VCD is complex , involving various actors with different motives  existing assessment tools focus on few basic indicators
        • Incomplete picture of the VCD impacts:
          • 2007: GTZ conference on value chains
          • 2010: Humphrey & Navas-Alemán
        • Some reasons for concern : limited poverty reduction in response to non-traditional ag. export programs
    • 4. What we think we know about VCD and poverty reduction
        • VC framework is necessary, but insufficient for designing interventions that address rural poverty  Need for complementary conceptual frameworks
        • Asset endowments matter : poor households and small enterprises require minimum assets to benefit from VCD
        • Asset-based approach provides a useful framework for considering poverty (Moser 1998); however, limited application of approach for assessment and design of interventions
        • Services embedded in the chain are important, but likely insufficient for helping the poorest to meet asset thresholds
        • External services are also critical : need for range of services at the right time and in the right combination
    • 5. Knowledge gaps
        • Can smallholders build assets and reduce their vulnerability through participation in VCD?
        • Can small businesses build their assets and evolve into viable businesses in response to VCD?
        • How inclusive is VCD? Can the poor meet thresholds?
        • Do positive and negative feed-back loops exist and what are the related implications for asset building?
        • Given the diversified livelihoods of rural households, are they able to intensity their participation in VCs?
        • What is the potential for an asset-based approach to assess VCD, taking into account the tradeoffs between rigor and user friendliness?
    • 6. “ 5Capitals” assessment tool
      • Salient features
      • Multi-scale and multi-dimensional
      • Impact pathways, with pre-defined set of expected outcomes
      • Focus on changes in livelihood assets for understanding poverty impacts
      • Focus on changes in business assets for understanding business performance impacts
      • Designed with over 4 years with two interactions of inputs from development practitioners and researchers
    • 7. Collaboration for tool design
      • Process
      • 2007: Ford Foundation hired CATIE for reviewing existing knowledge on the poverty impacts of VCD  lack of appropriate tools
      • 2007-09: Tool design – Phase 1
      • 2009-11: Tool design – Phase 2 (with ICRAF included as key partner)
      • 2012-?: More rigorous implementation for addressing knowledge gaps and refining tool
      • Partners
      • CATIE + CG (ICRAF, CIP, Bioversity) + NGOs + consultants + Ford Foundation
    • 8. Asset-based approach for assessing VCD Regional and local markets Product 1 Product 2 International market Product 3 Context political – legal – institutional – market – cultural Remittances Off farm work Market oriented agriculture Subsistance agriculture Household assets + To what extent do diversified rural livelihoods allow for the building of assets in response to VCD?
    • 9. Enterprise level interventions Project 2 Household level interventions State agency Cooperative Provider of financial services Buyer 1 Project 1 NGO Community 1 Community 2 Community 3
    • 10. Asset-based VC assessment Farming households SMEs (Coops, Associations) Buyers / processors Retailers Consumers Changes: Asset endowments of farming households Changes: Asset endowments of upstream enterprises
    • 11. Impact pathway - households
    • 12. Impact pathway - small businesses
    • 13. Case studies – Phase 1 Partner Chain Country Bioversity International Organic banana Bolivia CRS Plantain El Salvador CATIE & LWR Certified coffee Nicaragua CATIE & Technoserve Taro root Nicaragua University of Plymouth & Swisscontact Dairy Sri Lanka MEDA Handicraft Pakistán M. Harper & R. Roy Frozen shrimp India EDA Honey India LWR Basic grains Burkina Faso KIT & BioRe Organic cotton Tanzania KIT & FAIDA-MaLi Allan Blackia nut Tanzania
    • 14. Case studies – Phase 2 Partner Chain Country AIACA Handicrafts India CEDO Bean seeds Uganda Bioversity International Platain Dominican Republic R. Roy & M. Harper Chicken India Aimee Russillo & Winrock-Wallace Center Organic produce USA Intercooperation Beans Ecuador Technoserve Coffee Colombia Swisscontact Dairy Bolivia Technoserve Fresh horticulture Colombia Farm Concern International, KARI African vegetables Kenia MEDA Fresh horticulture Afghanistan
    • 15. Lessons learned in case studies
      • Asset-based approaches are powerful tools to design and assess value chain interventions
      • … but they require systems thinking, critical analysis and willingness to dig deeper
      • The middle ground between rigor and ease-of- implementation continues to be elusive
      • Lighter tools as possible entry point but no substitute for full-fledged impact assessment
      • Complementary tools needed to determine impact at other levels (e.g., intra-household, community)
      • Attitude matters : 5Captials is useful only when applied by those with a commitment to poverty reduction; openness to mutual learning; and willingness to admit failures
    • 16. Lessons learned in case studies
      • To effectively build assets in response to VCD, households need a minimum level of asset endowments
      • For those above the asset threshold , VCD has greater potential to stimulate asset building and related positive feedback loops (“ VCD ready ")
      • For those below the asset threshold , VCD alone has limited impacts of asset building – thus the need for development interventions that are not market-based
      • The high-risk, high-cost context in which the enterprises and households operates implies long and winding pathways for asset building
      • Despite the growing recognition of multi-dimensional poverty concepts, integrated attempts to reduce poverty through VCD have yet to emerge
    • 17. Some outputs to date
      • Methodologies/tools (CRP 6.1)
      • Donovan & Stoian, with contributions from Thiele, Ratner & Katerberg (2012) 5Captials: A tool for assessing the poverty impact of value chain development.
      • Donovan & Stoian (Eds.) (2012) Does Value Chain Development Reduce Poverty? A Case-Study Companion to the 5Captials Assessment Tool.
      • Peer-reviewed publications
      • Stoian et al (2012) VCD for Rural Poverty Reduction: A Reality Check and a Warning. ED&M .
      • Donovan & Poole (2012) Asset Building in Response to VCD: Lessons from Taro Producers in Nicaragua. IJAS .
      • Garming et al. (2011) Farmers' Community Enterprise for Marketing Organic Bananas from Alto Beni, Bolivia. ED&M
      • Katerberg et al. (2011) Evaluating Value Chain Impact Using a Sustainable Livelihoods : Study Horticulture in Afghanistan. ED&M
    • 18. What we still don’t know
      • How can VCD interventions better respond to different contexts and rural populations with different asset endowments?
      • Under what circumstances can positive feedback loops be achieved through VCD? (and can negative ones be avoided?)
      • How effective are collective enterprises in helping to build the assets of their member households?
      • What are the options for building synergies between VCD interventions and other types of interventions by the private and public sector? (joint investments?)
      • The potential for 5Captials to improve the design of VCD interventions (ex-ante assessment)
    • 19. ICRAF in CRP 2.2 (Linking small producers to markets)
        • Development opportunity : Increased contribution of the production and marketing of underutilized fruits for strengthening rural livelihoods; combined with increased demand for fruits/veggies in South
        • Development problem : Major barriers on the supply and demand side
        • Potential solution : value chain development, combined with more enabling business environment, related to the production and marketing of underutilized fruits
        • Potential role for ICRAF : ex-ante assessment of VCD options using the 5Captials tool
    • 20. ICRAF in CRP 2.2 (Linking small producers to markets)
      • General objective : identify effective options for building viable, pro-poor value chains for underutilized fruits (UUF) in Peru, Cameroon, and Kenya
      • Specific objectives
      • Identify the potential of small-scale enterprises that buy and process UUF to benefit from VCD
      • Identify the potential of smallholders that produce UUF to participate in and benefit from VCD
      • Generate new insights for improving the design of VCD interventions and on the design of 5Captials
    • 21. ICRAF in CRP 2.2 (Linking small producers to markets)
      • Implementation period
      • 2012-2015
      • Key activities:
      • Stage 1: Analysis of value chain context
      • State 2: Ex-ante assessment of 2 existing or potential value chains using 5Captials
      • Data collection methods:
      • Household surveys
      • Key informant interviews, review of secondary information, focus groups
      • Key ICRAF staff:
      • Jason D., Amos G., Judith O. Steve F., and N.N.