Chain empowerment Supporting African farmers to develop markets Royal Tropical Institute (KIT), Faida MaLi, and International Institute of Rural Reconstruction (IIRR), 2006

This is a book of hope for Africa’s smallholder farmers. It shows how they can earn more from their crops and livestock by taking control over the value chains they are part of – chains that link them with consumers in Africa’s towns and cities, as well as in other countries.

The book describes two basic strategies that groups of farmers can use to improve their incomes: vertical and horizontal integration. Vertical integration means taking on additional activities in the value chain: processing or grading produce, for example. Horizontal integration means becoming more involved in managing the value chain itself – by farmers’ improving their access to and management of information, their knowledge of the market, their control over contracts, or their cooperation with other actors in the chain.

This book contains 19 case studies showing how groups of farmers throughout Africa have adopted one or both of these strategies to improve their incomes. It shows how development organizations have helped them do this – how they have succeeded, and how they have sometimes failed. It shows the need to invest in improving the quality of existing products, developing new products, establishing market linkages, and building farmer organization and capacity.

The book provides numerous insights for those striving to empower smallholder farmers to develop markets. It will be of particular interest to government policymakers and staff involved in agricultural development, non-government organizations, university faculty and students, trainers, evaluators, and donors seeking ways to promote agriculture in Africa and elsewhere in the developing world.

The book is written in easy-to-understand language and is richly illustrated with line drawings.

Contents

Published 2006 by the Royal Tropical Institute (KIT), Faida MaLi, and International Institute of Rural Reconstruction (IIRR).

ISBN 9966754008

Download full text 5666 kb

Download individual chapters:

• Cover 749 kb
• Front matter 1215 kb
• 1 Setting the scene 345 kb
• 2 Introducing value chains 460 kb
• 3 Chain actors 660 kb
• 4 Chain partners 882 kb
• 5 Chain activity integrators 639 kb
• 6 Chain co-owners 655 kb
• 7 Strategies for chain empowerment 319 kb
• 8 Facilitating chain development 361 kb
• 9 Resources 549 kb

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Role of Paul Mundy: Writeshop manager, editing, desktop publishing, overall responsibility for production

Reviews

Spore 127, Feb 2007

Market access for African farmers

For many smallholder farmers seeking outlets for their products, declining government support and increasingly demanding requirements from supermarkets and importers combine to make marketing a daunting challenge.

This manual offers practical help by presenting a range of examples in which smallholder farmers and communities in various parts of Africa have succeeded in developing strategies to secure market access. It describes a wide range of experiences, including very small-scale initiatives such as rural women in Mali who collect and process shea butter, and others in Tanzania who make herbal soap from jatropha (Jatropha curcas). Larger-scale success stories include Kenyan mango producers who have developed market linkages through farmer field schools and smallholders in Malawi who have been helped to access the paprika market. But big or small, the message is always the same — the recipe for success lies in investing in the improvement of existing products, developing new products, establishing market linkages and building farmer organisation and capacity. With the help of clear illustrations, boxes and diagrams, this guide offers plenty of suggestions for achieving this winning formula.

New Agriculturist, June 2006

Vertical and horizontal integration may not sound like a very exciting subject, but don't be deceived. Drawing on nineteen case studies from across Africa, Chain Empowerment shows how farmers can earn more from what they produce, and turn unrewarding 'supply chains' into 'value chains' that offer benefits to all involved in the process of producing and marketing goods. Vertical integration essentially involves producers playing more roles within the chain, such as processing and other kinds of value-adding. Examples from the case studies include projects to boost fruit juice and honey production among communities in Tanzania and trading and milling of grains in Kenya.

Horizontal integration involves developing better management of the value chain, for example by better use of information, better understanding of the market and co-operation with other actors in the chain. There are numerous examples, some of which have featured in past editions of New Agriculturist, such as finding a niche for Ugandan vanilla and revitalising Mozambique's cashew industry. Chain empowerment particularly focuses on how intermediary organisations can work with farmer groups and others to transform supply chains. Information is presented in a well-structured way, emphasising practice rather than theory, making this a useful resource for NGOs and others working with farmers and farmer groups.

Enterprise Development and Microfinance 19(4), October 2008

Globalization has dramatically changed how products are sourced and to whom they are sold. African farmers are at a disadvantage with their lack of information regarding standards and markets as well as their lack of capital, skills and assured quality and consistency of their product. In order for smallholder farmers to take advantage of the opportunities provided by market liberalization and the global arm of retailers for sourcing, they must be competitive. This book entitled Chain Empowerment, with the sub-title Supporting African Farmers to Develop Markets describes how ‘intermediary organizations can work with farmers’ groups and other actors to convert supply chains into value chains’.

From the experience of the authors, farmers usually participate in supply chains where they sell directly to a buyer for the best price they can get, which is usually a low price to the farmgate trader. Whereas if a farmer participates in a value chain each of the actors in the chain usually invest in their chain activity to improve competitiveness and support other actors in the chain to ensure that the chain is more efficient. Developing value chains with a pro-poor focus can improve the livelihoods of farmers. The intended audience is the wide range of actors and organizations who are working with farmers to alleviate poverty: extension workers, NGOs, training institutions, ministries of agriculture, private sector actors, research organizations and policy makers at the multinational level.

This book draws upon the lessons learned and innovations from 38 organizations that have extensive experience in assisting farmers to develop links with higher value markets. These representatives spent six days together in a ‘writeshop’ to share their case studies, which described how a group of farmers, with the assistance of an intermediary organization, developed a value chain or strengthened their position in one. Through peer review, their case studies were allocated to one of four typologies that defined the ways in which the farmers participated in the chain – as ‘chain actor’, ‘chain activity integrator’, ‘chain partner’ or ‘chain co-owner’.

Chapter 1 describes the process of how the book was compiled. Chapter 2 describes the value chain and articulates the difference between a supply chain and value chain. Chapters 3 to 6 present case studies that illustrate each of the typologies that describe what position the farmers hold in the chain. There are 19 case studies presented throughout these chapters, each with a description of the chain, the intervention, lessons learned, challenges and future possibilities. Chapter 7 pulls it all together by articulating what each typology represents, refers to case studies that reflect the typology, how to monitor the progress of an intervention that is attempting to assist farmers to have more power in the chain, and the skills and assets farmers need to participate as a ‘chain actor’, ‘chain partner’, ‘chain activity integrator’ or as a ‘co-owner’ of the chain. The final chapter elaborates how to facilitate the process of improving the participation of farmers in value chains.

The value chain approach is a means to identify end market possibilities, how the interfirm relations prohibit or facilitate the involvement of the poor, the informal and formal rules that regulate the chain and the upgrading needs of firms to improve the efficiency of the chain. This approach is a means to analyse ALL actors’ roles in the chain and how each of the actors influences the chain. Opportunities and constraints can then be identified, which interventions then address.

The typology classifications are intended to assist readers to be farmer centred in their interventions in order to promote pro-poor value chains. What the typology classifications do is change the value chain lexicon in an attempt to reach their intended readership. By focusing on one set of actors, the farmers, readers could be convinced of only focusing on the farmers and not analysing the entire value chain. The value chain approach is intended to address the entire value chain, which is a market system. The typologies disregard the power dynamics between farmers and the other actors along the chain and assume that with supports farmers can achieve a level playing field. To illustrate this let’s look at three of the typology classifications.

‘Chain activity integrator’ is a description of farmers as value chain actors who through an intervention upgrade their function in the chain and vertically integrate several transformative activities. In value chain lexicon this is functional upgrading and vertical integration. When a firm enters into a new level of the value chain they change their function, and by so doing eliminate other actors such as intermediaries. This usually includes product upgrading – where the product quality is improved, and process upgrading, which reduces transaction and production costs.

‘Chain partner’ refers to farmers positioning themselves to be ‘business partners’ with the buyers so that the ‘buyer will be willing to pay better prices, listen to their demands, and invest in them’. An intervention then would focus on developing the management capabilities and technical skills of farmers within an association who then bring their product, skills and knowledge to the table and the buyer brings capital and market information. Both parties then negotiate and listen to each other. This does not acknowledge unequal power relations. In value chain lexicon this typology classification reflects improving interfirm linkages. By strengthening the horizontal linkages there is more leverage to negotiate with vertical links.

‘Chain co-owner’ refers to when farmers are well organized and insert themselves in the chain and have contact with end consumers who communicate directly to the farmers what they want. The authors do acknowledge that it may be difficult for African farmers’ groups to communicate directly with European consumers, but they can communicate with importers. Yet even with importers, would farmers be ‘co-owners’ of the chain? Pretending that interventions can lead to farmers being ‘co-owners’ of the chain disregards any of the literature regarding governance of value chains and assumes that a level playing field can be attained despite the evidence that real markets do not operate in this reality. In value chain lexicon this type of intervention would be responding to improving vertical linkages and channel upgrading, which is shifting to a new end market of higher value.

The strength of the book lies in the case studies that illustrate various innovations of connecting farmers to markets. There are examples of lead firms providing technical assistance to farmers to grow high-value products, and of strengthening farmers’ associations, which enables them to have a stronger negotiating capacity with buyers.

Organizations and institutions attempting to support pro-poor value chain development are in need of a road map that illustrates how to achieve this. It seems that the three institutions that published the outcome of the ‘writeshop’ are attempting to create a framework that brands their institutional preference for working with farmers. For the field as a whole, this new perspective can lead new comers to the field to believe that the chain evolves solely around the farmers. It is a delicate balance for the field to ensure that the marginalized are included, yet at the same time, inclusion and benefiting from economic growth requires a broader analysis of how value chains operate and a grounding in real markets where the power dynamics of vertical and horizontal linkages affect the participation of the poor.

Mary Morgan, Independent Private Sector Development Consultant