Review of guides for value chain development, by Jason Donovan (ICRAF)

1. Review of guides for
value chain development
Jason Donovan
ICRAF
“Making the connection: Value chains for
transforming smallholder agriculture”
6–9 November 2012 - Addis Ababa, Ethiopia

2. Setting the stage
 VCD forms key element of strategies for
spurring economic growth and addressing rural
poverty  proliferation of guides for VCD
 Key elements of VCD are still evolving:
– concepts: value chain, governance, pro-poor
– methodologies: rigor, depth, scale, learning
 Limited debate on the design of VCD guides
– rigor / depth vs. user friendliness
– specialization vs. all-in-one solutions
– design issues vs. implementation problems

3. A review of VCD guides
 11 guides selected
 Areas covered in review:
 objectives, market focus, and assumptions
 definitions VC and VCD
 recommendations for data collection and analysis
 user friendliness and adaptability
 recommendations for M&E
 originality, innovation, strengths, limitations
 3-stage review: 1) coauthor, 2) authors of the
guides, 3) external review

4. Portfolio of
11 guides

5. Definitions for chain and VCD
 Chain definitions – lots of variation!
– VC, market chain, market system, agrifood chain
– 2 types of definition: activity focused, actor focused
– most guides consider a chain to include all actors that
comprise a subsector, despite the variation in scale
applied in VC projects
 VCD definitions – bit more consensus
– World Bank: building mutually beneficial business links
– CIP: improved chain relations (innovation, trust)
– CIAT: developing strategic partnerships / networks
– IIED: integrating smallholders into modern markets

6. Users, objectives and assumptions
 All guides designed for use by non-researchers, often
projects, NGOs, and government agencies
 Outputs from implementation: strategy for VCD
 Development objective: Most guides ultimately aim to
stimulate economic development and reduce poverty
 But… limited discussion on how VCD is expected to
contribute to poverty reduction  no impact pathway
 General assumption that smallholders have the
assets needed to invest in VCD and don’t face major
trade-offs related to the investment of assets
To what extent do diversified rural livelihoods allow
smallholders to participate in and benefit from VCD?

7. Chain selection
 Careful chain selection matters:
– Sustainability of interventions
– Inclusion of poor
 Most guides include discussion on chain selection:
Selection lead by Selection lead by Assumption that
local stakeholders outside experts chain has already
been selected
2 6 3
 But… most guides provide:
– incomplete set of parameters for selection
– few examples of how to collect and assess data
– limited discussion on costs/benefits of chain selection

8. Data and analysis collection
at different levels
Level of Level of attention given to data
data collection and analysis (n=11)
collection
No attention Basic High
Intra- 10 0 1
household
Household 4 4 3
Enterprise 4 3 4
Chain / 0 2 9
market
Service 1 10 0
provider

9. Household and enterprise-level
data collection
Households
 FAO: input availability, production costs, production
technologies, management practices
 CIAT: role in VC, problems with production, marketing,
gaps in service offer
 UNIDO: potential risk scenarios, options to eliminate,
manage or mitigate potential risk
Enterprises
 M4P: identification of bottlenecks, analysis of costs and
margins, estimate of income and income variability,
employment generated
 ILO: strengths and weaknesses for VC participation,
working conditions

10. Open questions about smallholders
and VCD
 What investments are needed for different types of
smallholders to participate in VCD?
 What interventions are needed before VCD?
 What should be done with the most vulnerable –
those that are not “VC-ready”?
 What are the risks? How do mitigate them?
 How to identify and address potential tradeoffs for
VCD?

11. Open questions about collective
enterprises and VCD
 Can enterprises effectively respond to the demands
of buyers and members?
 Are they economically viable?
 What investments are needed to increase viability?
 What investments can be carried out with internal
resources?
 What combination of support services are needed?
Are they available?

12. Data analysis
 Strong focus on participatory analysis of
problems and solutions
– helps build collaborative base for VCD
– but…limited attention to validity and reliability
of qualitative information
 Lack of tools for assessing risks, trade-offs,
investment returns
 Few guides suggest the possibility of variation in
the population of stakeholders
 Quantitative analysis is side-stepped by most of
the guides

13. Flexibility and guidance in application
 Pre-conditions for implementation
– market focus (local vs international): none
– business environment / history: yes
– chain-actor capacities: sometimes
– chain type: none
 Altogether limited options for designing more
tailored VCD strategies
 Many guides provide examples of successful
implementation
 …but few guides discuss pitfalls in
implementation or present a fully-developed
case studies

14. Monitoring and evaluation
 Roughly half of the reviewed guides provide no
discussion of M&E for resulting VCD strategies
 Among those that address M&E, a basic set of
indicators are provided for assessing changes at
the level of enterprise and household
– income generated, new product lines,
productivity, investments
 Only GTZ and USAID discuss attribution
 Guides not designed to provide a full treatment of
M&E in the context of VCD
 Emergence of specialized guides: 5Capitals, DCED

15. Conclusions
 Guides provide an innovative framework for
understanding markets and engagement with actors
 But, need for more tailored strategies: based on
context and local needs & interests
 Need for increased attention to critical VCD issues:
investments needs, investment sources, potential
returns, risks, tradeoffs, vulnerability, gender equity
 Issues too complex for any one guide: VCD toolbox
 Conceptual frameworks are too simple – impact
pathways are nonexistent
 Urgent need for critical reflection, debate &
collaboration for moving forward

16. Recommendations
For authors:
 Place greater attention on the needs of the poor
 Provide guidance for addressing critical contextual
elements (market reach, exiting capacities)
 Address head on the difficult aspects of VCD
design and implementation (promote learning!)
For funders:
 Support research & learning for understanding
how VCD contributes to rural poverty reduction
 Encourage innovation in concepts & tools for VCD
 Foster debate for improved design and
implementation of VCD guides

17. Thank you!
Jason Donovan
ICRAF
c/o Centro Internacional de la Papa (CIP)
Lima, Peru
j.donovan@cgiar.org