Wednesday, 16 November 2011

Value chain approach to agriculture for rural development in Kenya

Value chain approach to agriculture business refers to collaboration of the industry partners, to improve quality of agriculture products, increase agriculture systems efficiencies, or develop differentiated agriculture products, for achievement of a more rewarding position in the market place. This helps the partners to have competitive advantage. Value chain approach to agriculture is a recognized modern agriculture business strategy which is customer focused. The partners aim is to match products and services to the needs and demands of the end consumer. A common vision among the partners to serve the consumer, and similar motivation of profit maximization normally has a direct positive impact. This approach lays special emphasis on value creation and agriculture innovation. Value-chain approach to agriculture is crucial for linking small businesses to markets. Therefore it is invaluable for livelihood improvement and rural development particularly in Kenya. The approach challenges its partners to ‘think outside the box’ in order to add value to the products and services demanded by their customers.

Therefore every partner focuses on value creation for the end consumer. The value chain partners in includes:-

  • Farmers or producers
  • Farm input dealers
  • Wholesalers
  • Distributors
  • Retailers
  • Exporters
  • Primary agro-processors
  • Secondary agro- processors
  • Food companies
  • Food service operators
  • Marketing boards
  • Agro-Industries
  • Finance institutions

This  approach has several key benefits some of which are access to markets, improved information flow, Benefits of economies of scale, shared cost of risk of innovation, rewarding business relationships, competitive advantage, guaranteed markets, better prices and accelerated rate of innovation due to involvement of the end customers such as retailers and food service operators, who understands the market demands. This results in a chain which is very responsive to the market needs.
Government Extension agents in Kenya deliver key value chain information to the players.

 communication between partners is vital and should be maintained resulting to:
1.      Partner’s rapid response to change in technology or market needs.
2.      Feed back from customers on problems for solutions to be worked out together.
3.      Customer loyalty (trusted relationships)
4.      Improvements in value chain activities because feedback is shared among partners.
5.      Sales achievement, while customers receive the desired product.
6.      Quality compliance of products and services to established
7.   standard and Financial stability for value chain partners due to business success.