Workshop: Value Chains - An introduction to value chains
description
Transcript of Workshop: Value Chains - An introduction to value chains
an introduction to value chains
malcolm beveridge and froukje kruijssen
WORKSHOP
WorldFish Center, Penang18-22 July 2011
overview
• purpose
• introduction to value chains
• methodologies
– value chain analysis
– value chain development
• using value chain analysis and development
– case studies
source: Oxfam America (2011)
Fish market, Dohaa
Source: http://www.flickr.com/photos/yahl/3246788986/#
purpose
• value chains are central to the CRPs
– WorldFish scientists should understand the basics
• by the end of the workshop, we intend that you have a better understanding of
– what a value chain is (jargon)
– why value chain research is central to the CRPs
– value chain analysis
– what value chain development entails
– how to engage with VC research in the Center
background
value chains – a definition
• ‘.. comprise all activities needed to bring farmed produce to consumers..’ *
– credit
– seed
– feed
– production
– processing
– storage
– marketing
– distribution
– consumption* source: Gomez et al. 2011. Science, 332, 1154-1155.
value chains
productioninputs
andservices
transportand
processingmarketing consumption
• increasingly used in development and associated research because they
– provide a good framework to ensure desired outcomes and impacts
– identify where problems – e.g. inefficiencies, gender inequities - are occurring and where interventions are needed
– highlight the importance of private sector development and identify where public sector and civil society can best play a role
• applied to an enterprise, a conglomerate, a sub-sector or a sector
• at each node a product is exchanged or transformed and value added
upstream downstream
value chain analysis
value chain analysis
inputsand
services
• the analysis of
– chain configuration (input-output structure)
– institutional framework
– governance
– upgrading (development)
• takes account of
– dynamics
– barriers, opportunitiessource: USAID (2010)
Shrimp farming value chain, Bangladesh
institutional framework• ‘.. the rules of the game in a society’*
– organizations
– formal (e.g. laws) and informal (e.g. norms of social behaviour) rules
*source: North (1990)
productioninputsand
services
transportand
processingmarketing consumption
industryorganizations
• value chain analysis
– factors that interact with the functioning of the value chain
– external to the governance of the chain
– influence terms of participation, gains.
producerorganizations
ministries
NGOsorganizations
andpressure groups
regulations
politicalparties
standards
governance
inputsand
services
• “.. inter-firm relationships and institutional mechanisms through which non-market, or ‘explicit’, coordination of activities in the chain is achieved..”*
• exercising governance
– deciding who does what, when, how, under what conditions along the chain
– results in allocations of resources, distributions of gains, and specific terms of participation and of exclusion
• ‘lead firms’
– occupy one or more functional positions along a value chain that govern or drive it
– decide who does what along the chain, how, with what specifications and for what rewards
*source: Humphrey & Schmitz (2004)
value chain development
value chain development - program design
source: www.actionforenterprise.org
step 1 – which value chain?
Typical supply flows for livestock products in a lower-income country
source: ILRI/CIAT/WorldFish/ICARDA (2011)
step 2 - value chain analysisStudies Participatory Adaptive
Methodology - Consultants spend several weeks interviewing key informants, reviewingstatistics, etc;- Information used as program design tool
- More streamlined approach, bringing together key informants/value chain reps for workshops, focus groups;- Information used as program design tool
- Target groups are selected and support initiatives beginimmediately
Advantages - Provides a strong analytical background to VC issues, constraints and opportunities
- Particularly appropriate for development of new products or markets
- Provides initial orientation to help select appropriatesupport initiatives- Fosters relationships with value chain representatives and sponsor organization- Less costly than in-depthanalysis
Avoids drawn out and expensive analysis - Builds support on in-depth understanding of target group needs and priorities- Adaptive to changing conditions
Disadvantages - Can be time consuming and expensive;- Analysis can be excessive- can be agency centered and/or rigid
- Analysis can be subjective and dependant on theinformation provided by workshop or focus group participants and therefore requires validation
- Risk of getting involved in a value chain for which nopromising support initiatives present themselves
modified from www.actionforenterprise.org
step 2 - e.g. study type methodology• inexpensive; rapid; useful for scoping - preliminary analysis - and where limited
outputs and outcomes (i.e. little change) are sought
• inaccuracies/biases
• methodologies
– key informants (phone and e-mails; field visits)
– published information (reports and papers; statistics)
Hatcheries
Feed Mills
Processors
Informal Traders
Inputs Farm Traders ProcessingProduction Zone Consumption Zone
Energy Commodities
Retailers
Retail outlets
On-farmseed
On-farmfeed
Manure
Large Traders
generalized aquaculture value chain, Zambia
steps 3–4 – identify and assess solutions
modified from www.actionforenterprise.org
Constraint Type ofconstraint
Market-based solutions
e.g. green bean exports, Kenya
discuss with solutionproviders and users
steps 5–6 – intervene and monitor
source: www.actionforenterprise.org
Step 5 – choose interventions
• focus on causes not symptoms
• prioritize
• strategic view
• enable (invest), incentivize and sustain change
Step 6 – measure performance
• more affordable fish
• increased consumption by target groups
• more gender equitable employment
developing value chains
(i) TNCs - maximizing poverty reduction
Objectives
• determine how the company’s procurement, manufacturing and distribution practices influence how easily poor people find quality employment, earn a living wage, sustain a business or participate in the market.
e.g. Coca-Cola/SABMiller, Zambia
source: Oxfam America (2011)
maximizing poverty reduction among TNCs
• numbers of workers at each node
• incomes and benefits; taxes generated
• empowerment
• freedom of association
• grievance and dispute resolution
• diversity and women’s participation
• environmental impacts
source: Oxfam America (2011)
recommendations
independent audit
actions
(ii) improving small-scale producer value chains
• small producers linked only to buyers of their products
• reduces rewards and/or whole value chain performance
– sales of small volumes
– high uncertainty of price
– sales to many buyers
• cannot acquire reliable market information or access finance and other support from buyers
– poorly quality standards and quality
– lack of traceability
seaweed farming, Tanzania
upgrading• process upgrading: transform inputs into outputs
more efficiently by reorganizing production system or through better technologies. e.g. change from cage to pond culture by fish farmers
• product upgrading: change to more profitable product lines e.g. processors switch from frozen to breaded fillets
• functional upgrading: increase skill set e.g. from feed mill to vertically integrated company that includes farming and processing
• inter-chain upgrading: use skills acquired in a different sector/chain e.g. farmers switch from rice to Pangasius
• other forms of upgrading: increase volume, meet standards and certification, deliver on logistics and lead times, get paid better for the same product e.g. Fair Tradephotos: Chen Oai Li, Hong Meen Chee, Ingrid Kelling, Froukje
Kruijssen http://free-photos.biz
(iii) cost – benefit analysis of fishing
Objectives
• evaluate impact of interventions
– quotas, effort regulation or area closures
• on ecosystems, the economy, society and food availability
cost-benefit analysis fishing - methodology
source: Christensen et al. 2011
• determine flow (amounts, revenue, costs) of fish products from sea to consumer
• describe the social benefits (employment, incomes) from fish production and trade
• consider income distribution and social benefits of the fishing sector
• links trophic eco-system model to a value chains
Ecopath/Ecosim Value Chain Analysis
modeled benefits to fleet and value chain
source: Christensen et al. 2011
revenue revenueprofitprofit
(iv) gender
• value chains are embedded in a social context
• value chain development affects gender roles and relations
• gender equity and value chain competitiveness are mutually supportive goals
supporting gender equitable value chains
• understand men and women’s roles and relationships
• foster equitable participation
• address the distinctive needs of women
• support women’s economic advancement
• design and promote gender equitable, benefit sharing mechanisms
• include men in defining problems and solutions
source: http://www.fao.org/gender/gender-home/gender-programme/gender-livelihoods/en/
removing gender constraints
source: USAID (2010)
further reading• Christensen et al. 2011. A combined ecosystem and value chain modeling approach for evaluating societal costs and
benefits of fishing. Ecological Modeling, 222, 857-864.
• Gomez, M I et al. 2011. Research principles for developing country food value chains. Science, 332, 1154-1155.
• Mayoux, L and Mackie, G. 2008. A Practical Guide to Mainstreaming Gender Analysis in Value Chain Development . International Labour Office. - Addis Ababa.
• Oxfam America. 2011. Exploring the Links Between International Business and Poverty Reduction. The Coca-Cola/SABMiller value chain impacts in Zambia and El Salvador. Oxfam America,
• Riisgaard, L, Bolwig, S, Matose, F, Ponte, S, du Toit, A and Halberg, N. 2008. A Strategic Framework and Toolbox for Action Research with Small Producers in Value Chains. DIIS Working Paper no 2008/17. Copenhagen: Danish Institute for International Studies.
• Rubin, D, Manfre, C and Barrett., K N 2009. Promoting Gender Equitable Opportunities in Agricultural Value Chains: A Handbook. Publication prepared under the Greater Access To Trade Expansion (GATE) project, under the Women in Development IQC Contract No. GEW-I-00-02-00018-00, Task Order No. 02. Washington, DC: United States Agency for International Development.
• USAID. 2011. Gender and Pro-Poor Value Chain Analysis: Insights from the Gate Project Methodology and Case Studies. http://www.usaid.gov/our_work/cross-cutting_programs/wid/pubs/GATE_Gender_Pro-Poor_Value_Chain_Analysis_05-09.pdf
• Veliu, A, Gessesse, N, Ragassa, C.and Okali, C. 2009. Gender Analysis of Aquaculture Value Chains in Northern Vietnam and Nigeria. Agriculture and Rural Development Discussion Paper 44. Washington, World Bank.
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