Agricultural Value Chains

A GAME-CHANGER FOR SMALL HOLDERS

PHOTO : Green beans processing in Tanzania — one of many efforts to link small-holder farmers to international markets. Photo by: Fintrac

A value chain is a set of linked activities that work to add value to a product; it consists of actors and actions that improve a product while linking commodity producers to processors and markets.Value chains work best when their actors cooperate to produce higher-quality products and generate more income for all participants along the chain, as opposed to the simplest kinds of value chains, in which producers and buyers exchange only price information — often in an adversarial mode. Value chains differ from supply chains, which refer to logistics: the transport, storage and procedural steps for getting a product from its production site to the consumer.A value chain encompasses the flow of products, knowledge and information, finance, payments, and the social capital needed to organize producers and communities.

Information is especially important to all value chain actors and flows in two directions: markets inform producers of price, quantity and quality needs, product handling and technology options, while producers inform processors and markets on production quantities, locations, timing and production issues. In a value chain, processors and marketing agents may provide producers with finance, inputs and training in technologies of production.