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Basic step in developing a competitive market chain strategy

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Basic step in developing a competitive market chain strategy

  1. 1. Basic Steps in Developing a Competitive Market Chain StrategySECTION 3 Basic Steps in Developing a Competitive Market Chain StrategyIntroduction identify key informants or contacts in theThe main stages in developing a strategy to selected market chain.increase the competitiveness of a market chaininvolve a series of sequential steps shown in Designing a Strategy for IncreasingFigure 4. If you have been following the Market Chain Competitivenessagroenterprise manuals in order, the 1. Collate information on market opportunitiesinformation required for Steps 1 and 2 will have and socioeconomic assets of the area andbeen gathered previously. The next stage in the target beneficiary group.process is therefore to map your chain and 2. Select a market chain. Prioritized Market contacts Identification and production chain identified convening of actors Mapping Analysis of production chain Support system and interventions Negotiation and Analysis of design of the critical points strategy TimelineFigure 4. Stages in the design of a strategy to increase competitiveness. 19
  2. 2. Participatory Market Chain Analysis for Smallholder Producers 3. Identify contacts including the different The next step should be for the group to work actors and interest groups that should form through the other aspects of how their products part of the analysis. move from the initial buyer to a final consumer. 4. Map the market chain with participation This visioning process needs to include all the from representatives from the chain. stages of preproduction, production, 5. Evaluate the level of business organization post-harvest, processing, selling, and retailing. along the market chain. The three main components of a marketing 6. Review the services available to support the chain with their links and functions are shown selected market chain. in Figure 5. It may help for the facilitator of this 7. Catalogue past interventions in the area with process to work through these different aspects particular attention to those which impact with different people and then join the ideas upon the selected chain and chain actors. together so that time, and/or groups, can be 8. Analyze critical points for the development of developed effectively. the market chain. 9. Develop a long-term strategic vision based Use of the market chain mapping approach has on market prospects and possibilities for several advantages: product and process innovation.10. Around this vision, design a set of strategies 1. It permits a more complete vision of the to resolve the critical points, taking market chain and the roles that different advantage of opportunities that contribute to actors play within a business framework. an increased level of competitiveness for the 2. Divides the chain into discreet functions and market chain and its actors. enables the actors to see who performs which functions and their relativeVision of the Market Chain importance. This allows the farmer groupGiven the many challenges of the marketplace, and service provider to begin to understanda practical starting point in developing a the market chain.marketing strategy is to assist partners to 3. Access to more complete informationvisualize their market chain from beginning to facilitates the identification of critical pointsend. The market chain should start at the point impeding the development of a market chain,that your partners, i.e., farmers, local traders and where improved and/or alternativeand processors, know best; in the case of interventions can be applied, so thatfarmers, the activities on-farm and the investment in a particular market chain canproduction of basic goods. Outlining the market be most effective.chain should then work backwards to 4. Visioning the market chain with multipledocument the provision of inputs, before actors facilitates the formation of alliancesworking forwards to document where produce is and synergies between the different actorssold. At each point in the market chain, names through the identification of commonof the people who sell input goods and buyers interests, reduction of transaction costs, andwho purchase their goods should be recorded. a more efficient use of available resources. Post-harvest Production management, Marketing processing Functions Functions Functions · Planning and organization of · · Collection Selection · · Contacting buyers Negotiating markets production factors · · Packaging · Negotiating price · Access to inputs and resources · Transformation Differentiation of and purchasing conditions · Production · the product · · Sale · · Harvest Sale of product · Added value Transport Delivering product to client · Sale of productFigure 5. Components of a market chain.20
  3. 3. Basic Steps in Developing a Competitive Market Chain StrategyThis first impression of the market chain is a services to find possible ways of improving theuseful way of starting to appreciate where functioning and competitiveness of a selectedfarming groups fit into a broader marketing market chain. Understanding the relationshipcontext. However, this first look does not between business development services and theexplicitly identify three important aspects that bottlenecks that limit market chainare key to understanding how a market chain development is equally important. Often it isoperates. These include (i) the degree of more helpful to identify necessary services thatbusiness development of participating do not exist or do not effectively respond toorganizations, (ii) the provision of business market chain bottlenecks than to focus on thedevelopment services, and (iii) the context in evaluation of existing services.which the market chain operates. Finally, a general understanding of the contextA limitation of the traditional market chain in which the market chain operates is critical.approaches is that it tends to evaluate actors in Specific issues include local and nationalisolation and does not take into account the policies, the climate for economic development,combined business acumen held by the people social issues, natural resource managementinvolved in a market chain. A good concerns and the existing technology within aunderstanding of the level of business market chain.organization along a market chain, and theactors that make up this business support To address these issues, we propose a widerprocess, will allow for the design of strategies view of the market chain that combines thethat play to existing strengths. Taking this into basic buying and selling role of marketaccount when designing intervention strategies chain participants, with an analysis of thewill be more representative of the marketing business organization of the existing supportchain and builds in a higher degree of systems and the overall context of the marketsustainability in the overall approach. chain.Traditional market chain analysis can also A Wider Vision of the Market Chainoverlook the role of business support services— The wider view of a market chain includes notboth public and private—that support critical only the functional aspects of a market chainareas within a market chain. As in the case of (production—post-harvest—marketing), butbusiness organization, it is important to also business organization, supporting services,understand the quality, coverage, and and the economic framework in which theeffectiveness of existing business development market chain operates (Figure 6). Contextual issues Post-harvest Production management, Marketing processing Business organizations Business development services Policy Economic Social Technology EnvironmentFigure 6. Wider perspective of a market chain. 21
  4. 4. Participatory Market Chain Analysis for Smallholder ProducersBy taking this broader view, this methodology identify interventions that generate a moreaims to fill gaps that have been identified in equitable distribution of benefits, and alsotraditional market chain analysis and by doing ensures that rural smallholders, their familiesso contribute to the principles which we believe and their communities are involved in theare essential from the perspective of the poor decision-making process. This aspect is crucialrural producer. These principles include: if the design of strategies is to achieve a major goal in poverty reduction through the provision1. Identifying chain actors and their of benefits for producers, i.e., those with leastroles resources.Experience has shown that the success orfailure of a market chain intervention depends 3. Designing strategiesprincipally on the partnerships that are built The use of the term “strategy” permits thebetween actors and business organizations that design and implementation of a series ofparticipate in a particular chain. This method complementary projects guided by commontherefore requires that market chain actors are and clear, demand-led objectives, and anclearly identified and existing relations overall competitive vision for the marketingunderstood. This information enables the chain.individuals involved in the design of anenterprise to develop strategies built on trust 4. Focus on competitivenessand recognition rather than only focusing on The methodology aims to generate a consensusopportunities and balance sheets. between actors involved in the market chain with the view of facilitating better management2. Seeking equity in the market chain of intervention resources by focusingThorough analysis of the market chain and investment on increasing the competitiveness ofdeveloping strategies to increase a market chain.competitiveness is not only a matter ofmaximizing profit; it should also take into CIAT’s Rural Agroenterprise Developmentaccount a fair distribution of gains along the Project has developed the following workingmarket chain. As such the method seeks to definitions of competitive strategies: What is a marketing strategy to increase competitiveness? A marketing strategy that increases competitiveness is a set of activities that are planned and carried out with the active participation of diverse actors within a market chain, that share common objectives, around which one or more business organizations and/or interest groups are linked. Why focus on a strategy to increase competitiveness? A strategy to increase competitiveness seeks to strengthen or establish a market chain that has been prioritized based on its market potential, sustainable production system, and capacity to generate income and employment for a given rural population. How is a strategy to increase competitiveness carried out? A strategy to increase competitiveness is carried out through short-, medium-, and long-term research and development activities in production, post-harvest management and processing, marketing, business organization, and business development services, involving multiple actors along the market chain and is based on an analysis of the critical points which limit the market chain’s competitiveness.22
  5. 5. Basic Steps in Developing a Competitive Market Chain StrategyMarket Chains and Innovation production and receive a premium price forPromoting processes of change or their products. In this case, the innovation to“innovation” is crucial when attempting to increase market chain competitiveness wasincrease competitiveness within market organic certification.chains. However, most opportunities forinnovation are situation specific, touching on However, as illustrated in the case of organica few or many of the links in a market chain cacao (see Box 1), simply taking on an organicincluding: input supply, production, post- “certification” based on a minimal financialharvest management, processing, marketing, investment without also taking on new skills orbusiness organization, and business knowledge, may not confer long lasting marketdevelopment services. Ideally innovations benefits. This is because when basic marketraise the competitiveness for the market strategies show themselves to be successful,chain as a system and thus capture added many other producers can replicate the samevalue that can be shared by many “competitive advantage”. In economists’ terms,participants within the chain. It is more often the “barrier to entry” for this market innovationthe case that innovations assist particular was low and, thus, the innovation was easilyactors or groups of actors along the chain replicable by others, leading to oversupply ofenabling them to capture additional value. the product.The ability to capture added value at specificpoints in a market chain should not be Based on this experience with organicconfused with the highly negative connotation cacao, what lessons can we learn aboutassociated with the extraction of “rents” that innovation and competitive advantages6?:is often laid at the door of unscrupulous 1. If an innovation is easily replicable by othertraders. Typically this type of exploitive producers, it tends to be quickly copied andbehavior is symptomatic of highly inefficient thus loses the advantage and added gain.market chains that are manipulated through 2. Profitable innovations, no matter howlocal political power. The approach presented complicated, are copied sooner or later andhere aims to identify and remove such thus the initial profitability will decline withdistortions. time. 3. This indicates that processes of marketThe use of innovation is particularly information and innovation should beimportant when attempting to differentiate a continuous and require periodic updatingproduct in the market. The process of setting and analysis to maintain competitivea product apart from the rest adds overall advantages and profitability.value by attracting consumers and thenbuilding product loyalty. Examples of this Large multinational companies investapproach include the use of logos, branding considerable time and money in improving theiror labels that distinguish one product from products and generating product brands tomany similar types, or places emphasis on differentiate their products from rival products.how a product was produced, such as Branding is supported with large promotionalorganic, sustainable, or socially responsible, budgets that can make certain products suchor via new presentations and the development as Coca-cola, Kiwi fruit, Manchester United,of new products. These strategies are where “household” names. It is often the case that theinnovation can play a major role in gaining existence of an easily identifiable brand or labellonger-term added value for a product in the translates into a more sustainable competitiveface of competition. advantage in the long term rather than innovations in systems of production andOver the past decade, trading standards such post-harvest.as fair trade and organic production havebeen developed as a means to gain higher Does the power of branding have implicationsmarket prices for small-scale producers. The for the processes of rural enterpriselogic behind the organic strategy was that development that are being promotedmany small-scale producers are by default, nowadays? New approaches to market-basedoften organic producers as they do not havethe necessary funds to apply chemical 6. For wider discussion on this theme, consultfertilizers or pesticides to their crops. These Kaplinsky (2000). See also Kaplinsky and Morrisfarmers can easily conform to organic (2001). 23
  6. 6. Participatory Market Chain Analysis for Smallholder Producers Box 1 Organic cacao and sustainable advantages When the El Ceibo cooperative in Bolivia entered the market for organic cacao and fair trade cacao in 1992, it was one of the first to offer this product. Initially, the novelty of both products provided much higher prices than those offered for traditional cacao. As other producers and their organizations found the same “innovation”, profitability decreased as shown below. Although the possibility of additional income remains, it is not at the same level as at the start of the innovation. Comparison of price increase according to market and quality of product. Year Conventional cacao Ecological cacao Free market Fair trade Free market Fair trade (price in US$) (price increase %) (price increase %) (price increase %) 1992 950 121 179 226 1993 1110 64 105 173 1994 1330 39 50 71 1995 1570 18 - 45 1996 1440 22 - 40 SOURCE: Adapted from Augstburger (1996). Even when the initial additional income for the first innovators was good, these data show how an easily replicable competitive advantage loses value over time. The expansion of ecological cacao supply for the fair trade market is also increasing, as shown in the following figure. 1500 Cocoa 1000 500 0 1997 1998 1999 2000 2001 SOURCE: Data from Fenway Libraries Online (FLO) (www.flo.org). The combination of these two tendencies shows us that the competitive advantage conferred by the ecological certification and fair trade will tend to decline as more providers copy this strategy.interventions need to take this point into options to increase efficiency across a marketaccount if rural producers are to compete chain. Focusing on upgrading one enterprise iseffectively in the future. The Fair Trade probably the simplest starting point and is themovement is one strategy that seeks to use more common intervention. However, mostlabeling or branding techniques to differentiate market chains are comprised of severaltheir products in the marketplace from those enterprises, which may be poorly linked. Inproduced by large scale agribusiness and these cases, individual gains can be lostmultinationals. through inefficient marketing channels. Given that most agroenterprise activities are not carried out by a single enterprise, but byIndividual Enterprise Efficiency versus various interrelated actors, achieving aMarket Chain Efficiency competitive market chain requires improvingStrategies to increase competitiveness at the organization along the chain. This requiresindividual enterprise level are different from establishing trust-based relations between24
  7. 7. Basic Steps in Developing a Competitive Market Chain Strategypotential rivals. This challenges the service products including dairy products, farm-raisedprovider to facilitate a move beyond the poultry and olives.conflictive competitive relations that operate inmany market chains. When taking a market While it does not guarantee quality, AOC doeschain focus, there are no good or bad actors, impart important knowledge to consumers—the approach should focus on a “systemic” level they can follow regions with good crop years,of efficiency that seeks to benefit all the learn reputable producers and buy accordingly.participants. The AOC certificates essentially link theRaising Competitiveness through product with its locale and manner ofMarket Chain Quality Assurance production in such a way that it is easilyAnother important issue in sustaining market distinguishable from products having similarperformance is product quality. For products characteristics produced by industrial firms. Antraded formally, e.g., internationally or through example of this type of labeling by originmajor international supermarkets, products will includes the exclusive drink of the rich,only be accepted if they meet strict food safety “Champagne”, an otherwise unremarkableprotocols such as ISO, HACCP7, and sparkling white wine.EUREPGAP8. These protocols are conductedthroughout the market chain and therefore it is According to the mark of origin procedure, thevital that all actors within a market chain label “Champagne” can only be applied to winemaintain these stringent quality procedures if produced from the region of Champagne,they are to avoid losing income or have their according to traditional methods. Similarproduce downgraded. For consumers this mark sparkling white wines that are grown elsewhereof quality gives them greater confidence in and sold at a fraction of the price of realbuying a product that has been approved by a Champagne, is now labeled “Method demarket chain scheme. Measures such as Champagne”, to disassociate it from the originalHACCP requires that actors along market product.chains work in a more coordinated manner andby doing so, gain a greater market share. The French government’s Institute of Denomination of Origin expects eventually toEUROTRACE is another legislative approach achieve coverage of 20% of French productsbeing used by the European Union to track sold. Currently, France sells US$18 billionquality from point of sale back to point of products with a certificate of denomination ofproduction. Retailers use this quality-based origin (Becker, 2003). This method is now beingprocess as part of a market chain inventory applied to high value traditional products inprocess. EUROTRACE however offers another other countries such as high quality coffeeopportunity to differentiate a product on the origins and in many developing countries thismarket, as it provides an avenue to reduce the approach provides a lucrative opportunity for arisk taken by a buyer when purchasing from limited number of producers.multiple sources across the globe. Once againthe emphasis is on recognition of roles and Market Chains, Supply Chains, andlinkages between multiple actors within a Value Chains9market chain and this requires a high degree of The terms production chains, supply chains,coordination to be successful. market chains, and value chains are often used interchangeably, but there are some importantRaising Competitiveness through Mark differences. In its simplest definition, the termsof Origin (Appellation/Labeling) production chain, supply chain, market chainIn France, the government has invested large are synonyms used to describe all participantssums of money in promoting the certification of involved in an economic activity which usesorigin for agricultural products, known as inputs and services to enable a product to be“Appellation of Origin” Certification: First used made and delivered to a final consumer. A valuein 1935 for validating wine vintages, the AOC chain is understood as a strategic networkhas expanded to include a range of agricultural between a number of independent business organizations. According to Hobbs et al.7. Hazard quality assurance at critical point.8. For more information, see www.eurep.org 9. For more information, consult Hobbs et al. (2000). 25
  8. 8. Participatory Market Chain Analysis for Smallholder Producers(2000), a value chain is differentiated from a Scale of Evaluation and Level ofproduction/supply chain because: Participation· Participants in the value chain have a long- term strategic vision. This methodology has been designed to be both scalable and flexible in terms of clients needs.· Participants recognize their interdependence and are disposed to work together to define However, the reader should note that this guide is biased towards a high degree of participation not only by the lead service provider, but also common objectives, share risks and benefits, from representatives from all relevant chain and make the relationship work.· It is oriented by demand and not by supply, and thus responds to consumer needs. actors. This bias is intentional as the method seeks to assist local service providers in· Participants have a shared commitment to control product quality and consistency. building community capacity and skills.· Participants have a high level of confidence in one another that allows greater security in The reader should be aware that there are alternative methods for market analysis and most market chain studies do not seek to business and facilitates the development of transfer these skills and are therefore not common goals and objectives. conducted in such a participatory manner. This approach is most appropriate for use at theTable 3 presents other comparisons between a local and provincial levels and in value chainproduction market chain and a value market development. However, there are other morechain. rapid methodologies that are less participatory for sub-sector10 analysis. These methodsThis guide seeks to provide a practitioner with a include Guide 8 in this series entitled “A Guidebetter understanding of a production chain and to Rapid Market Appraisal” by Wandschneiderfacilitate sufficient negotiations between and Ferris (in preparation), and also the classicparticipants to lay the groundwork for the text on Methods for Rapid Market Appraisal byformation of a value chain. The resulting value Holtzman (2002).chain will most likely involve a smaller group ofthe participants than the production chain. Not Considerations When Applying theall participants are interested or willing to enterinto a value chain arrangement given the Method at Diverse Scales oftransaction costs involved in negotiation, Interventioninformation exchange, and the risks or costs This section seeks to present some of thethat may be incurred by changes along the implications in terms of capacities, resourcesmarket chain. Generally the process of changeand added responsibility within a value chain 10. Sub-sector is the term used to describe the variousadds costs. levels of market chain activities that allows goods and services to flow from sites of production toThe advantages of a value chain are that consumption points. A sector is generally used tocomplex strategies of product differentiation describe a consolidation of activities, e.g., anand innovation are easier to achieve, and thus agricultural sector, a health sector, an education sector and within this context a sub-sector refers tocontribute to building sustainable competitive a specific branch of activities based around oneadvantages over time. Box 2 gives an example of commodity or product within a sector, e.g., a maizea value market chain in a rural community. sub-sector, livestock sub-sector.Table 3. Enterprise relations: Production chain versus value chain. Factors Production market chain Value market chain Information flow Little or none Extensive Principal focus Cost/price Value/quality Strategy Basic product (commodity) Differentiated product Orientation Led by supply Led by demand Organizational structure Independent actors Interdependent actors Philosophy Competitiveness of the enterprise Competitiveness of the market chainSOURCE: Hobbs et al. (2000).26
  9. 9. Basic Steps in Developing a Competitive Market Chain Strategy Box 2 Example of a value market chain: “Las Brisas,” Santa Cruz de Turrialba When the cheese factory Las Brisas began activities over 10 years ago, it functioned like all the other plants in the cheese-making cluster of Santa Cruz de Turrialba in Costa Rica. The company had unstable relations with suppliers and buyers. As the sector evolved and became more competitive, Las Brisas developed strategies to move from being just one more player in the production chain to carving out its own value chain. This search led to the establishment of trust-based relationships with both suppliers and buyers. On the milk production input market side, La Brisas made its biggest milk provider a new partner in the business, and thus guaranteed 70% of its daily consumption. On the output market side, Las Brisas pursued two market strategies. First, it developed contacts with one of its clients—a biscuit factory—to produce a special cheese for manufacturing biscuits. The two businesses jointly obtained support from the University of Costa Rica for specific research on the best type of cheese for the biscuits. Through this product development process, Las Brisas was able to enter a new market, in which no competition existed, as well as assisting the biscuit factory to expand production and sales. Secondly, Las Brisas consolidated relations with an important chain of supermarkets in San José, the country’s capital, through the application of a methodical quality control process for its own brand. This relationship has resulted in joint promotion and marketing strategies as well as the development and testing of new products based on consumer demands detected by the supermarket. What are the results has Las Brisas achieved through its value chain strategy? 1. The quality of its products is recognized as being the best in the zone and, therefore, have high acceptance in the market. 2. Las Brisas is the only business from the cheese cluster in Santa Cruz that sells consistently directly to supermarkets in San José. In 2001, a promotion of cream was so successful that it contracted additional production with other plants of Santa Cruz, but under its supervision and brand. 3. Las Brisas suffers less than other businesses during times of milk shortage. In summary, constituting a value market chain has given Las Brisas an important competitive edge over similar plants that share the same comparative advantages.SOURCE: Personal interviews (November 2002). Local Refers to a scale ranging from a village to a community/municipality. This scale is useful when seeking to work closely with processes of community development and community management of natural resources. Provincial/District Includes more than a municipality and can reach as far as a province or department/ district. This scale is useful for working with more geographically dispersed agroenterprise market chains, or those with more complex interaction, such as clusters or local agri-foodrequired, and methodologies for this approach systems.depending on the scale of analysis. The term“scale” refers to the geographic coverage in Nationalwhich the market works. This guide works atthree scales (local, provincial, and national) that Focuses on one single market chain at thecan be defined as: national level and presents advantages when the 27
  10. 10. Participatory Market Chain Analysis for Smallholder Producersobjective of the exercise is to formulate policies Representation and level of participationor plans in medium- or long-term to promote What are the considerations for guaranteeingnational competitiveness in a given product. active participation and adequate representation of all actors and interestsAs the scale shifts from local, through provincial involved in the market chain? As we increaseto national, there are several changes that need the geographical scope, the direct participationto be considered. Some of the likely changes and of our target beneficiaries is likely to fall, andquestions that should be answered before these factors need to be discussed and resolved.starting are listed below: Recognition of actorsClients and capacity to convene How do we assure that we hear the needs of allWho are the intended beneficiaries? How are they actors in the market chain? This point requiresorganized? Who are the key actors of the market special care both with the market chain’schain and what are their roles? How will benefits weaker actors (i.e., the poor, ethnic minorities,from this process be shared between women, among others) and those consideredbeneficiaries and the wider community? Whom negative (i.e., traders) whose ideas tend not toshould we convene for work at the scale be taken into account.proposed? Do we have the capacity to bring theseactors together? Differentiated strategiesYour project design should have clarity in regard How do we guarantee that the final strategyto these issues before any work is undertaken. includes differentiated solutions according toDefining the client is probably the most important the needs of the diverse actors? Alldecision in the process. agroenterprise market chains include heterogeneous actors, and thus demandCosts differentiated solutions according to their needs instead of “one size fits all” strategy.What can we achieve with the available budget?The definition of viable objectives with theavailable resources is important and can have Potential for impactimportant implications for the scale at which we What is the potential impact of actions at thework. It is better to work at a smaller scale rather chosen scale in terms of number ofthan attempting to work at a level where resources beneficiaries, economic development, naturalare insufficient to guarantee results. resource management, social and gender equity, impact on class relations, or others?Methodologies and level of detailHow do we choose an adequate basket of Table 4 summarizes some of the considerationsmethodologies for the scale at which we wish to of scale in relation to the themes previouslywork? Methods that work well at a local scale are defined.probably less effective at a national scale. Thisconsideration is related to the degree of Observations on the Use ofparticipation that can be achieved at the different Participatory Methodsscales, level of detail, information requirements, This guide is based on participatory methodsand costs. What is the key information that we adapted from the school of Participativehave to collect and analyze? Collecting additional Learning and Action (PLA). These methods,information, however interesting it may be, which include focus groups, mapping,implies more analysis and additional costs. visualizations, social dramas, and other forms of facilitated reflection, seek to prioritize notManagement, negotiation, and only documented results, but also the processimplementation capacity of application. Although a concrete result isWhat implications does the chosen scale have in generated at each stage in the process, i.e., aterms of management and negotiation with map, a matrix, a table, etc., these products areimportant decision makers? How strong will our not the central purpose of the exercise. Of equalnegotiating position be in relation to key decision importance and benefit to the group members ismakers in the market chain as we expand the the time and space they have invested inarea of coverage? Can we reasonably implement analysis and reflection around thea strategy at this scale? methodological tool. The discussions and28
  11. 11. Basic Steps in Developing a Competitive Market Chain StrategyTable 4. Considerations when applying the method at different scales. Theme Scale Local Provincial/District National Client identification, High: Clients are easily Medium: Clients can be Low: Clients defined in terms representation, and defined; study is being identified and integrated with of income categories, less easy participation suited to their needs. study at specific points. to integrate clients with data gathering and analysis. Facilitates direct participation Need to select representatives of actors throughout process from each group with the Actors selected represent a from each interest group. capacity to clearly represent larger group and therefore the interests of all. need to have recognized ability/reason to share information and credibility within their group. Capacity to convene Good for local actors, but Good with provincial actors, Good with national actors, but more difficult with external although may leave some out with little real representation actors. greater possibility of working possibility of convening with external actors. national decision makers. Costs Low: Costs of participative Moderate: Costs of workshops, High: Costs of workshops, workshops, generation and generation and analysis of generation and analysis of analysis of information and information, transfer, lodging, information, transfer, lodging, feedback to participants. communication of results. publication, and formal communication of results. Methods and level of Participative, with local actors. Participative at times, but Emphasis on systematized detail More detailed, with direct with the support of survey data (databases, means, information from individual teams or systematized data. surveys, etc.) with key actors. Less detailed, with decision makers. systematized data and Mean data or national averages for the province. aggregates—sector trends. Management, Limited: Depends on local Medium: Mix provincial High: Good possibility of implementation, and resources and desires of resources with external. May obtaining resources, but capacity to negotiate participants. If advances are fall into the trap of depending difficulties in implementation achieved they may be on external actors and if clear rules do not exist sustainable. resources. among the actors. Needs differentiation This can be done by income, access to market, gender, class, technology employed, or any other criteria. It is necessary to ensure that all relevant groups are included. Strategy This can be done by income, access to market, gender, class, technology employed, or any differentiation other criteria. It is necessary to ensure that all relevant groups are included. Potential impact Limited to the work zone, Medium, with wider coverage. Higher, but with the and perhaps some challenges in implementation neighboring sites. previously mentioned.agreements reached are generally more strengths, weaknesses, and the design of aimportant than the final tangible result of the shared strategy to increase its competitivenessmethod. requires listening to all voices equally. The role of the facilitator in this process is to systematizeThe use of participative methodologies in this and document the information and present itguide encourages members to air their views back to the market chain actors so that theyand we aim to hear many voices speaking about can use this analyzed information to make morea single market chain. These points of view will informed decisions on what to do, together, tobe quite different—what the rural producer improve their economic activity.thinks is very different to what a city traderthinks—but all the viewpoints have important The design of a strategy to increaseinformation regarding the reality of the market competitiveness is a systematic way to generatechain. To understand the market chain, its an open, informed discussion among actors 29
  12. 12. Participatory Market Chain Analysis for Smallholder Producersfrom a market chain. But, at the end of the day, production versus value market chains; somethose who decide what to do, design action appreciations regarding the scale ofplans, and implement them are the actors intervention; and finally, some initial ideas onthemselves. the use of participative methodologies. In the next section, we will look in more detail at theSummary principles behind this method. Many of theseIn this section, we have reviewed some basic principles relate to the concepts that we haveconcepts about market chains; an initial seen in this section, and together form adefinition of what the strategy to increase philosophy that supports the design ofcompetitiveness can be, how it is designed, and strategies to increase competitiveness.how it is carried out; some key ideas on30

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