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Thursday, 13 April 2017 21:12

Learn why value chains are critical to sustainable intensification

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why value chains are critical to sustainable intensification

A value chain can 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. In agriculture, this includes activities such as product design, production, marketing, distribution and support services up to the final consumer. Value chains work best when their actors cooperate to produce higher quality products and generate more income for all participants along the chain.

 

It encompasses the flow of products, knowledge and information, finance, payments, and the social capital needed to organize producers and communities. Information is especially important to all value chain actors and flows in two directions: markets inform producers of price, quantity and quality needs, product handling and technology options, while producers inform processors and markets on production quantities, locations, and timing and production issues.

 

Value Chain

As value chains differ considerably across countries and products, more research is needed to identify the optimal configuration enabling smallholder farmers to gain a greater share of their value and assume fewer risks. If value chains are to offer pro-poor opportunities for growth, then those markets in which the smallholders can have a comparative advantage needs to be identified and the producers actively assisted.

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Smallholders with a strong social network can draw upon their social capital to strengthen their position in the value chain. E.g., an effective producer organization or cooperative can help smallholder farmers increase their bargaining power by helping them enter into high – value supply chains and provide support for acquiring information on market prices and requirements.

The government has a big role in playing the support task in ensuring the development and coordination of value chains. Investments that incentivize greater productivity and ability to capture higher value include transport infrastructure energy for processing, research and extension services in new storage and packaging technologies and education and training in product marketing.

The most critical role of the government however, is the establishment of laws, regulations, and governance which sets rules for fair and competitive markets for farmers, marketing agents, and processors and permit farmers to secure land and property rights.

Given the economic importance of agriculture in many African countries, improving the functionality and the accessibility along the whole agricultural value chain can bring multiple benefits to farmers. This involves creation of job opportunities, services and connective infrastructure linking to wider markets. Participants in a well-functioning value chain eventually bring the farmers a more stable, resilient and predictable income.

Read 4474 times Last modified on Wednesday, 26 April 2017 12:58

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