Agricultural value chains and marketing

1. CHAPTER 4: AGRICULTURAL
VALUE CHAINS AND MARKETING
Reporters:
Joshua Lozada
Aljo Marc Domingo
Aries Jay Corpuz

2. 1. Introduction to agricultural value chains and
marketing
Supply Chains- Are a natural phenomenon of business and exist
whether they are manage or not.
 All agricultural products reach the end consumer of those products
through chains of individual business that link primary producers,
through various intermediaries, with retailers.
 Nevertheless, each business in a chain is a customer of the
business immediately upstream of it and a supplier to the business
immediately downstream of it.
 Business in a supply chain aims to maximize their individual benefit
by competing for cheaper inputs and higher prices.

3. While this kind of self-interest may appear to be
rational economic behavior for individual businesses,
there can be negative consequences for the chain as a
whole, as the following example illustrates:
Consumers may not get what they want because signals
from consumers are not transmitted clearly, or at all,
back up and chain.
Waste and inefficiency can go undetected.
Weaker members of the chain can be exploited by more-
powerful members.
Chain-wide responsibilities such as meeting
environmental or food safety standards may be ignored
by some members of the chain.

4. Agricultural Value Chain- include the flow of
products, knowledge and information between
smallholder farmers and consumers.
It can also defined as a market-focused
collaboration among different stakeholders who
produce and market value added products.
If agricultural value chains are offer pro-poor
opportunities for growth and development, then
those markets in which smallholders can have a
comparative advantage need to be identified and
the producers actively assisted.

5. Value Chain as System
Thinking about the chain as a whole having to perform
requires thinking about the chain as a system, because its
performance is a function of interactions among its parts.
Value chains enable improvements in product and
information flows via the strategic alliances and networks,
relationship management and governance structures that
are necessary for promoting innovation in product
development, production and marketing to satisfy
consumer demand.
A value chain is a set of linked activities that work to add
value to a product; it consists of actors and actions that
improve a product while linking commodity producers to
processors and markets.

6. The Value Perspective of chains as system
Value chains aim to satisfy consumer demand while
making profits for members of the chain
Knowing what consumers want and how to profitably
satisfy those requirements are therefore key questions in
improving the performance chains.
When an agricultural food chain is viewed as a system
whose aim is to profitably create and deliver value to
consumers, it is called a value-chain agricultural value
chains include the flow of products, knowledge and
information between smallholder/large scale farmers and
consumer.

7. Value-chain Thinking
One way of characterizing value-chain thinking is to
contrast supply chains and value chains. Consumer
decide whether they are going to buy product and
how much they are willing to pay for it.
Value chain will increases farmers incomes when they:
Understand market opportunities and focus on
producing what consumers in those markets wants;
and
Become preferred supplies by providing superior
service to their customers, for example in terms
reliability.

8. Understanding the Consumer
The understanding the consumer part of the first
piece of the value-chain thinking that lead farmers
need think:
Which products and what characteristics of those
products, are shoppers looking for?
Which crops should I grow, and which varieties?
Which livestock should I raise, and of which breed?

9. An Agricultural value chain may include:
Development and dissemination of plant and animal genetic
material, input supply, farmer organization, farm
production, provision of technologies of production post-
harvest handling, grading handling criteria and facilities,
processing- (local processing and industrial processing),
cooling and packing technologies, storage, transport,
finance and feedback from markets.
Benefits of agricultural value chains
Given economic importance of agriculture in,
improving the functionality and the accessibility
along the whole agricultural value chain can bring
multiple benefits for smallholder farmer.

10. Analyzing and understanding agricultural value
chain, market and market research.
A value chain analysis approach in agricultural
development helps identify weak points in chain and
actions to add more value.
Value chain analysis is a useful way of thinking through the
entire value chain of the product you are dealing with and
developing ways in which you deliver value to your
customer.
Add value by taking a raw material of little use to the end-
user ( for example, wood pulp) and converting it into
something the people are prepared to pay money for (e.g
paper).

11. Value Chain Three-
step Process:

12. Activity analysis:
First, you identify the activities you undertake to deliver your
product or services.
The first step to take is to brainstorm the activities that you
undertake tat in some way contribute towards your customer`s
experience.
At a personal or team level, it will involve the step by step flow of
work that you carry out.
For example:
How will you recruit people with the skills to give the best
service.
How to motivate yourself or your team to perform well.
How you keep up-to-date with the most efficient and effective

13. Value Analysis:
Second, for each activity, you think through what you would
do to add the greatest value in the way that each activity is
conducted.
Now, for each activity you‘ve identified, list the Value
Factors the things that your customersvalue in the way that
each activity is conducted.
For example, if you‘re thinking about a tree seedling
business, your customers will value an elaborate
explanation of how to care for the seedling after planting; a
polite manner; efficient taking of order details; fast and
knowledgeable answering of questions; and an efficient and
quick resolution to any problems that arise

14. Evaluation and Planning:
• Thirdly, you evaluate whether it is worth making
changes, and then plan for action.
• By the time you‘ve completed your Value
Analysis, you‘ll probably be fired up for action:
you‘ll have generated plenty of ideas for
increasing the value you deliver to customers.

15. There are three components of
value chain analysis:
network structure,
value added and
governance structure.

16. A network structure has two
dimensions: vertical and horizontal.
• The vertical dimension reflects the
flow of products and services from
primary producer up to end-
consumer (i.e. the value chain or
supply chain).
• The horizontal dimension reflects
relationships between actors in the
same chain link (between farmers,
between processors, etc.)

17. Value added
• is created at different stages and by different
actors throughout the value chain.
• Value added may be related to quality, costs,
delivery times, delivery flexibility,
innovativeness, etc.
• Quality can be divided into intrinsic
characteristics of the product itself (e.g. color,
taste, tenderness) and extrinsic characteristics
of the process which cannot be measured on
the product (e.g. organic or fair trade
production).

18. Benefits of value chains analysis.
• Helps understand process, stakeholders and
relationships.
• Helps to identify problems or opportunities to
improve contribution of specific actors and overall
performance.
Examples:
• The analysis of the dairy value chain may identify
critical needs such as: The need for more local milk
cooling points, more collaboration between dairy
plants and farmers and greater diversification of
final products.

19. Strategies to improve: value chain
participation

20. Empowerment: Empowering poor smallholders, men and
women, so that they can provide high-quality, sustainable
produce with an identified market destination (by
assuring adequate access to basic production inputs,
credit, capacity-building, market related information);
Supporting an enabling environment:
Facilitating poor farmers‘ access to markets as a catalyst
for poverty reduction.
Equity: Ensuring that the economic gains in value chains
are fairly distributed among the various actors, including
poor farmers

21. Market dynamics
• A market can be described as a place where
buyers and sellers transact their business.
• Marketing is a process of identifying and
satisfying the consumer needs in a most efficient
manner and at a profit.
• Marketing is the most important aspect in
business because even with the latest technology
today one can manufacture a product and if that
product is not bought it will be useless.

22. Market survey/ research
This is a systematic, objective approach to the
development and provision of information for
marketing decision making, this definition
emphasizes.
• that marketing research is a planned, well
organized process,
• the information obtained in research is not biased
by the interviewer or by the interviewing process,
• the information is gathered for the purpose of
helping managers make decisions

23. Conducting market research can include:
• Interviews (either by telephone or face
to face)
• Surveys (online or by mail)
• Questionnaires (online or by mail)
• Focus groups gathering a sampling of
potential clients or customers and
getting their direct feedback

24. Some important questions might
include:
• What factors do you consider when
purchasing this product or service?
• What do you like or dislike about
current products or services currently
on the market?
• What areas would you suggest for
improvement?
• What is the appropriate price for a
product or service?

25. Points to consider when carrying out a
market survey.
• Asses the demand of your customers,
know your competitors and their
advantages
• Know your customers and their
characteristics

26. Some important questions might include:
• What factors do you consider when
purchasing this product or service?
• What do you like or dislike about current
products or services currently on the
market?
• What areas would you suggest for
improvement?
• What is the appropriate price for a
product or service?

27. Attributes for successful marketing
• These are qualities of knowledge,
know how and social skills that are
required for successful marketing, and
may be useful to both direct value chain
actors and support institutions These
qualities are listed in the below:

33. Marketing
• Marketing contributes to improve
small scale farmers‘ livelihoods and
hence leads to poverty reduction.
• One of the major causes of high
levels of poverty among small scale
farmers are low producer prices
and high input costs.

34. Marketing constraints faced by producers
(farmers)
• Financial constraints that manifest
themselves in form of;
• inadequate financial resources for
investment, too high interest rates on
borrowed funds and unfavorable terms of
borrowing.
• One farmer observed that: borrowing
these days is a recipe for loss of my
property and am not ready for that.

35. • small scale farmers require financial
assistance to buy farm inputs- seeds
and fertilizers;
• storage/safety houses;
• purchase of harvesting materials;
• land preparation mainly slashing;
preservation/drying equipment,
training and transport.

36. • Lack of information on market
requirementssuch as quality,
quantity, prices and location.
• Limited skills and knowledge of
improved agricultural technologies
resulting in a slow rate of
technology adoption, high post
harvest losses, poor quality
products and generally low
production levels.

37. Mobilization of farmer production and
marketing groups
• Farmer‘s mobilisation and aggregation is
one of the most effective means of
reducing the risk in agriculture and
strengthening the livelihoods of small
holder farmers.
• The approach also helps small holder
farmers in accessing various benefits of
government schemes for rural
development.

38. Thank You!