1. Promoting Livelihoods through Value Chain Analysis
Jitesh Panda1
In India, Self Help Groups (SHGs) movement has been a major milestone in our struggle to fight
poverty. There has been increased access to credit and social empowerment of women. However, we are
yet to make a major break though as far as promoting livelihoods is concerned. Some of the popular
Government schemes that attempts to promote livelihood activities are: wage employment through
NREGA, watershed development projects – watershed plus approach and SGSY Scheme for Self
Employment. Typically programmatic activities that help in promoting livelihoods include facilitating
access to credit, revolving fund, training and at times market linkages. Some of the popular livelihood
promotion approaches have been sustainable livelihood framework, sector based or cluster based
approach. Through different tools, we also try to identify the poor and vulnerable households and focus
on promoting their livelihoods. We often realize that these approaches have led to limited or temporary
success (may be during the project period). There is need for further diagnosis – why we are getting
limited success, despite best of our efforts?
With increase in globalization, livelihood activities of a family are getting more and more linked to
market. This is irrespective of different assets like natural, financial, physical, human or social assets the
family may posses. However, this was not the case earlier. Earlier most of the commodities which were
produced in the village were getting sold in the same village or nearby market places. Influence of
production in far off areas had little effect on the livelihoods of specific area. We all are increasingly
realizing that context in which livelihood activities operate has changed i.e. shift from a typical
geographical context to market context. However, we continue to do similar planning for livelihood
promotion as we have been doing for last several years, may be in little improved manner. This includes
household and village based planning, cluster based planning, area based planning - like developing
natural resources and more particularly pro poor planning.
Often livelihood practitioners consider village petty traders/procurement agents and large Corporate
Agents as exploiters – negatively affecting livelihoods of poor. However, in the changing scenario when
market is a major influencer of livelihoods, there is increasing need to work with market players.
However one may note that there are few livelihood promotion programs that critically look at market to
design the promotion efforts. On the other hand, promoting livelihoods based on market analysis may
not fully work to the advantages of disadvantaged communities. Pure market based approach may lead
to promoting cultivation of new crops which people are not acquainted (making the intervention costly)
and may also be promoting interest of corporate entities than interest of poor. Value Chain Analysis is a
promising approach to resolve this dichotomy.
Value Chains generally refers to production to final consumption of a particular produce and it includes
activities, actors, and enterprises including Business Development Service Providers associated with it..
In most cases one value chain gets intertwined with other value chains. Even in some cases, where one
value chain ends, the other starts. One can define a value chain in a broad manner say mango value chain
in AP or narrow it down to mango exports value chain in AP.
1
Vrutti Livelihoods Resource Centre, 111, 1st Main Central Excise Layout, Bhoopasandra, Bangalore, India

2. Value Chain Analysis involves all activities, actors and enterprises. It helps to identify critical gaps and
opportunities for potential interventions. Value Chain Analysis needs to be done keeping purpose in
mind. For example when a Corporate Entity is undertaking Value Chain Analysis, the purpose may be to
maximize sales. But in our context, the purpose of value chain analysis is to enhance livelihoods of
disadvantaged households. This perspective need to be built in amongst the team undertaking value
chain analysis.
Typically following steps are involved in Value Chain Analysis. It starts with short listing Value Chains
worth studying – based on secondary data analysis & interaction with primary stakeholders. Specific
Value Chain Analysis involves:
• Overview understanding of the Industry
• Developing the Flow Diagram
• Identifying the Activities
• Identifying the Actors relating to each of the Activities
• Identifying the BDS providers
• Identifying the Enterprises
• Identifying the Enterprises of the Poor
• Identifying the critical gaps and emerging opportunities in the Value Chains
• Identifying pro poor gaps and opportunities
• Discussion with Poor People followed with Consultation with Stakeholders
• Identifying the Pro Poor Livelihood Interventions in the Value Chain
• Developing Livelihood Promotion Strategy – Value Chain focused
Value Chain Analysis of short listed important Value Chains in an area helps to develop overall micro
Enterprise Strategy. We may note that unlike typical survey through questionnaire or Focus Group
Discussion, Value Chain Analysis is exploratory in nature. It involves interaction with all types of
stakeholders in an open mind but in a focused manner. When one interacts with one stakeholder, it
generates several questions in mind, requiring further triangulation and also simultaneously generates
pointers for interventions. The approach to value chain analysis is done in an iterative mode. Although it
requires involvement of skilled professionals having understanding of the area and subject, BUT overall
cost of Value Chain Analysis is less as there is no need for large survey.
Over the years, Vrutti Livelihood Resource Centre, part of Catalyst group has built up expertise to
undertake value chain analysis. In recent years, Vrutti has undertaken value chain analysis of Paddy,
Groundnut, Coconut, Flower, Bamboo, Cane, Mango, Cashew and Pulses. Each of the value chains have
been studied keeping the requirements of client (purpose) in mind. Value Chain Analysis can be a user
friendly tool for identifying pro poor Livelihood Interventions. This would support numerous SHGs and
their members who already have some capital and assets; AND also experience of being associated with
livelihood activities to earn more being already associated with different Value Chains.