Under What Conditions Are Value Chains Effective Tools for Pro Poor Development?

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Understanding the benefits, costs, and risks when connecting small scale producers to formal markets is critical to supporting informed decision making by companies, farmers, NGOs, and donors about investing in supply chain opportunities. Key questions include: Who are the rural poor? Under what conditions do they benefit? What are implications of these lessons for our strategies in setting up “pro-development” value chains? What do we most need to understand next? This Executive Summary, and the longer paper it reflects, seek to inform these questions from not only a review of literature, but also from experience with a cluster of value chain projects by development organizations and businesses in Africa and Latin America.

Author: Sustainable Food Lab
January 2011

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How do you assess the development potential of a value chain opportunity? For practitioners working with farmers to identify value chains to participate in, or for companies deciding which types value chains might have more impact as part of smallholder sourcing programs, being able to identify the potential of value chains to reach and benefit the poor is critical. This paper shares a theoretical but useable framework to help practitioners determine how pro-poor a value chain is. The functionality of the framework is demonstrated by examining the cut flower industry in Kenya.  

Author:  Chad Hamre, August 2008

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This case study both shares ground breaking research on the impact business can have on poverty reduction and the story of the rich and challenging partnership between Oxfam GB and Unilever – two organisations with very different aims and perspectives. This research explores to what extent, and how, the wealth generated by the local operating company of a multinational company in a developing country is translated into poverty impacts in one particular country, in this case Indonesia. The research focuses on Unilever Indonesia, the local operating company of Unilever, one of the world’s leading fast-moving consumer-goods (FMCG) companies.  

Principal Author: Jason Clay, 2005

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“How are we doing?” is a simple question – but answering it can be surprisingly complicated. This case study chronicles the development of Farmer Group Space, a web-based system for the information sharing that creates a foundation for effective project monitoring. Special attention is paid to identifying the data that is important to key stakeholders (farmers, partners, development agencies) and to overcoming common challenges to data collection and analysis. The case discusses the use of laptop computers and mobile phones in data collection, and describes a series of useful toolkits. This case is one in a series that describes how CRS and its partners work with farmer groups and other stakeholders to develop agroenterprises. CRS and its partners created the series to share what they learned from their experience, what new skills were developed, and what team members discovered in reviewing their approaches. The series draws from a range of value chains and across a range of countries; each one focuses on a particular stage in the agroenterprise development process.  

Principal Author: Ben Watkins, Rob Rose and Margaret Mwangi, 2009

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This case study focuses on the effort to scale-up development impact through the introduction of new business models – specifically, through Fair Trade certification. CRS is interested in such models because they can operate in mainstream markets and hold the promise of an exit strategy; as trading relationships become self-sustaining, development staff can disengage and transfer resources to new areas. Fair Trade is a scheme where retailers and other chain actors aim to ensure that disadvantaged farmers, organized into cooperatives, get a fair share of the profits from their produce. It fosters the provision of market information credit and technical assistance to farmers. Farmers receive a guaranteed minimum price, plus “social premiums.” The case finds, however, that the real benefit of fair trade may not be in the additional income that it generates, but in the way it induces farmers to organize themselves to supply a particular market. This case study is one in a series that describes how CRS and its partners work with farmer groups and other stakeholders to develop agroenterprises. CRS and its partners created the series to share what they learned from their experience, what new skills were developed, and what team members discovered in reviewing their approaches. The series draws from a range of value chains and across a range of countries; each one focuses on a particular stage in the agroenterprise development process. 

Principal Author: Michael Sheridan, 2009