Monday, 19 September 2011

Agriculture Value Chains and Agricultural Policy

Agriculture value chain refers to a full range of activities which an agricultural product or service passes through from production to consumption. The value chain analysis is a concept from business management that was first described and popularized by Michael Porter in his 1985 best-seller, Competitive Advantage which means Creating and Sustaining Superior Performance. This commercial chain consists of activities which aim at producing value added products or services; where value addition refers to improving the worth of your product or service in the market in order to increase the profit margin. Value chain approach to agriculture therefore gives room to youth creativity and agriculture entrepreneurship development. The activities that comprises a value chain can be contained in a single firm or divided among different firms. Value Chain Development aims to improve access to markets and increase productive efficiency, ensuring that all actors including youth farmers benefit from these value chains. Value-chain approaches are a vehicle for linking small businesses to markets, and therefore are essential for livelihood improvement and economic development
Agriculture value chain consists of four parts namely
  • Upstream-This includes large scale farmers, small scale farmers and agricultural inputs dealers
  • Supply chain- supply chains consists of primary  agro-processors, distributors, wholesalers, and retailers
  • Mid stream- secondary processors e.g. making the product which takes less time to prepare for consumption
  • Downstream-An  example of players in this category are private label manufacturers
Value chain approach in agriculture is unique as it uses a participatory, stakeholder-driven approach to take advantage of opportunities for investment and growth in agriculture industry which has high levels of micro and small enterprise involvement particularly in Africa. Commercial agriculture and agribusiness projects should seriously focus on value chain development, which calls for mobilization of all players to work as partners from the beginning of promoting or strengthening an agricultural commodity, to ensure a common agreement on how to sustain the commodity.
A comprehensive government policy support is mandatory for a successful agriculture value chain. African farmers for a long time have been denied this kind of support resulting in stagnation of the agriculture sector and increased rural poverty. These policies of neglect stand in sharp contrast to those of developed nations, which provide farmers with a strong foundation of government policy support. The competitiveness of agribusiness not only depends on the functioning of players within a cluster, but most importantly, on the entire chain at the national and global level. This means agribusiness in developing countries needs to take globalization into account in order to improve competitiveness.For more information: Read