Review of guides for value chain development “Making the connection: Value chains for transforming smallholder agriculture” 6–9 November Addis Ababa, Ethiopia Jason Donovan ICRAF

Setting the stage VCD forms key element of strategies for spurring economic growth and addressing rural poverty  proliferation of guides for VCD Key elements of VCD are still evolving: –concepts : value chain, governance, pro-poor –methodologies: rigor, depth, scale, learning Limited debate on the design of VCD guides –rigor / depth vs. user friendliness –specialization vs. all-in-one solutions –design issues vs. implementation problems

A review of VCD guides  11 guides selected  Areas covered in review: objectives, market focus, and assumptions definitions VC and VCD recommendations for data collection and analysis user friendliness and adaptability recommendations for M&E originality, innovation, strengths, limitations  3-stage review: 1) coauthor, 2) authors of the guides, 3) external review

Portfolio of 11 guides

Definitions for chain and VCD Chain definitions – lots of variation! –VC, market chain, market system, agrifood chain –2 types of definition: activity focused, actor focused –most guides consider a chain to include all actors that comprise a subsector, despite the variation in scale applied in VC projects VCD definitions – bit more consensus –World Bank: building mutually beneficial business links –CIP: improved chain relations (innovation, trust) –CIAT: developing strategic partnerships / networks –IIED: integrating smallholders into modern markets

Users, objectives and assumptions All guides designed for use by non-researchers, often projects, NGOs, and government agencies Outputs from implementation: strategy for VCD Development objective: Most guides ultimately aim to stimulate economic development and reduce poverty But… limited discussion on how VCD is expected to contribute to poverty reduction  no impact pathway General assumption that smallholders have the assets needed to invest in VCD and don’t face major trade-offs related to the investment of assets To what extent do diversified rural livelihoods allow smallholders to participate in and benefit from VCD?

Chain selection Careful chain selection matters: –Sustainability of interventions –Inclusion of poor Most guides include discussion on chain selection: But… most guides provide: –incomplete set of parameters for selection –few examples of how to collect and assess data –limited discussion on costs/benefits of chain selection Selection lead by local stakeholders Selection lead by outside experts Assumption that chain has already been selected 263

Data and analysis collection at different levels Level of data collection Level of attention given to data collection and analysis (n=11) No attentionBasicHigh Intra- household 1001 Household443 Enterprise434 Chain / market 029 Service provider 1100

Household and enterprise-level data collection Households FAO: input availability, production costs, production technologies, management practices CIAT: role in VC, problems with production, marketing, gaps in service offer UNIDO: potential risk scenarios, options to eliminate, manage or mitigate potential risk Enterprises M4P: identification of bottlenecks, analysis of costs and margins, estimate of income and income variability, employment generated ILO: strengths and weaknesses for VC participation, working conditions

Open questions about smallholders and VCD What investments are needed for different types of smallholders to participate in VCD? What interventions are needed before VCD? What should be done with the most vulnerable – those that are not “VC-ready”? What are the risks? How do mitigate them? How to identify and address potential tradeoffs for VCD?

Open questions about collective enterprises and VCD Can enterprises effectively respond to the demands of buyers and members? Are they economically viable? What investments are needed to increase viability? What investments can be carried out with internal resources? What combination of support services are needed? Are they available?

Data analysis Strong focus on participatory analysis of problems and solutions –helps build collaborative base for VCD –but…limited attention to validity and reliability of qualitative information Lack of tools for assessing risks, trade-offs, investment returns Few guides suggest the possibility of variation in the population of stakeholders Quantitative analysis is side-stepped by most of the guides

Flexibility and guidance in application Pre-conditions for implementation –market focus (local vs international): none –business environment / history: yes –chain-actor capacities: sometimes –chain type: none Altogether limited options for designing more tailored VCD strategies Many guides provide examples of successful implementation …but few guides discuss pitfalls in implementation or present a fully-developed case studies

Monitoring and evaluation Roughly half of the reviewed guides provide no discussion of M&E for resulting VCD strategies Among those that address M&E, a basic set of indicators are provided for assessing changes at the level of enterprise and household –income generated, new product lines, productivity, investments Only GTZ and USAID discuss attribution Guides not designed to provide a full treatment of M&E in the context of VCD Emergence of specialized guides: 5Capitals, DCED

Conclusions Guides provide an innovative framework for understanding markets and engagement with actors But, need for more tailored strategies: based on context and local needs & interests Need for increased attention to critical VCD issues: investments needs, investment sources, potential returns, risks, tradeoffs, vulnerability, gender equity Issues too complex for any one guide: VCD toolbox Conceptual frameworks are too simple – impact pathways are nonexistent Urgent need for critical reflection, debate & collaboration for moving forward

Recommendations For authors: Place greater attention on the needs of the poor Provide guidance for addressing critical contextual elements (market reach, exiting capacities) Address head on the difficult aspects of VCD design and implementation (promote learning!) For funders: Support research & learning for understanding how VCD contributes to rural poverty reduction Encourage innovation in concepts & tools for VCD Foster debate for improved design and implementation of VCD guides

Thank you! Jason Donovan ICRAF c/o Centro Internacional de la Papa (CIP) Lima, Peru