Value Chain Development

Within the international development community there is widespread agreement that poverty alleviation will not be achieved without effectively functioning markets.

In Kenya, domestic food markets are often poorly organized. Problems may be found all along the value chain: At the upper end smallholder producers have difficulties accessing services, inputs and market information. Further downstream, trade is often under-funded and risky, and therefore largely personalized. Weak infrastructure, high taxes and corruptive practices keep transaction costs high. At the final sales point, product and quality differentiation is weak – and consumer prices high. Overall, domestic food chains are frequently characterized by low efficiency and a highly asymmetric distribution of information and market power between buyers and sellers (DfID, 2005). As a consequence, market incentives are stifled preventing smallholder intensification and quality improvement. Hardly any growth of value added can be expected. The value chain concept can be used to systematize such constraints and identify points of intervention.

Example: Analyzing the potato chain in Kenya
The potato sub sector is potentially of great importance for pro-poor growth in Kenya, because it employs around 500.000 farmers – and potatoes are the second most important staple food in Kenya. Initiating its activities in support of potato production for domestic consumption, the PSDA programme conducted a value chain study. The analysis reveals serious disincentives to the product and process upgrading. The main bottlenecks are in the trade system: Traders use variable bag sizes ranging from 100 to 220 kg/bag that inducing considerable uncertainty over prices, a problem aggravated by the absence of grades and quality standards. While local and market authorities charge high cesses and are prone to corruption, trader cartels take advantage of the market coordination failure. As farmers are forced to sell at low prices, there are little possibilities to invest in better inputs and improved on-farm storage.
Source: PSDA programme (GTZ Kenya, Nairobi)

This programme aims at acquainting potential multipliers (future trainers and facilitators) at district and divisional levels with the value chain approach. At the end of the training course, trainees will be capable to sensitize a broader public on the Value Chain approach. This course relates to our marketing is recommended to all trainees who want to also enhance their marketing skills.

•    Create awareness among trainees on the potential and limitations of Value Chain Development as means of fostering pro poor growth in rural areas and private sector development in agriculture.
•    Jointly work out in a participatory learning approach, which instruments/tools are applicable for Value Chain Analysis and the elaboration of an intervention strategy for the promotion of Value Chain Development.
•    Discuss roles and responsibilities of all actors, in particular Value Chain Facilitators.

Farmers, extension officers (ToT)

Standard Duration:
3-5 days

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