Odi jm cc aspen networks root change (09 dec 09) final

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Presentation to USAID and Aspen Institute on value chain upgrading (applied to Latin American trade programme COPLA) , Washington DC 2009.

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Odi jm cc aspen networks root change (09 dec 09) final

  1. 1. Upgrading along value chains:<br />strategies for poverty reduction?<br />Wednesday 09 November 2009COPLA, Root Change and ANDE Event, Washington D.C.Jonathan Mitchell & Chris Coles, Overseas Development Institute<br />
  2. 2. Scope of presentation…<br /><ul><li>Trade and poverty debate
  3. 3. How can value chain analysis help?
  4. 4. What the COPLA studies tell us?
  5. 5. How can poor people upgrade their position?
  6. 6. What have we learned?</li></li></ul><li>Trade & poverty debate…<br />Agriculture sector<br />Limits of orthodox theory<br />New theories of trade<br />Value chain analysis<br />Tea: sub-sector<br />Value chains<br />Small-scale cultivation<br />Small-scale processing<br />Domestic sales<br />Value chain 1<br />Factory<br />Plantation<br />Export<br />Value chain 2<br />Cluster<br />
  7. 7. The value chain: competitiveness, profit & income<br />Coffee up to export, Tanzania<br />Production<br />Primary processing<br />Transport<br />Secondary processing<br />Packaging<br />Transport<br />Wholesale<br />Transport<br />Storage<br />Export<br />Producers<br />Costs/kg<br />Labour, $0.42<br />Inputs, $0.26<br />Transport/processing, $0.32<br />Revenues<br />Price/kg parchment, $1.57<br />Gross margin, 36%<br />Sales, MT/season, 0.5<br />Gross profit/season, $285<br />Processors (curing)<br />Costs/kg<br />Local tax, $0.11<br />Transaction costs, $0.40<br />Packaging, $0.03<br />Processing, $0.06<br />Revenues<br />Price/kg green beans, $2.24<br />Gross margin, 3%<br />Sales, MT/season, 36,000<br />Gross profit/season, $2.52m<br />Exporters<br />Costs/kg<br />Transport, $0.09<br />Clearing & forwarding, $0.18<br />Warehousing, $0.03<br />Interest, $0.21<br />Revenues<br />Price/kg green beans, $2.85<br />Gross margin, 4%<br />Sales, MT/season, 7,200<br />Gross profit/season, $1m<br />
  8. 8. Themes emerging from COPLA studies?<br /><ul><li>Diversity of chains
  9. 9. Importance of lead firms
  10. 10. Difficulties of sustaining vertical links
  11. 11. Unsustainable development interventions
  12. 12. Influence of business and enabling environment
  13. 13. Poor people engage in different ways</li></li></ul><li>UPGRADING STRATEGIES<br />Enabling environment<br />Inter-chain<br />Functional<br />Process<br />Product<br />Vertical<br />Horizontal coordination<br />Functional<br />Process<br />Production<br />Processing<br />Retail<br />End markets<br />
  14. 14. What have we learned?<br />1. Clear rationale for sub-sector and value chain selection<br />Rigorous diagnostic<br /> - identify key rents<br /> - understand barriers to entry<br />Appropriate interventions<br />In practice, VCA is an art as well as science<br />
  15. 15. What have we learned?<br />Upgrading strategies are inter-related and sequential<br />Gaps in our knowledge (beyond producers & agriculture)<br />Differentiated level of outcome<br />
  16. 16. Thank you!<br />http://www.odi.org.uk<br />http://www.cop-la.net<br />

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