This paper explores the spatial heterogeneity in dairy production in the highland production area around the capital of Ethiopia, Addis Ababa. We look at how urban proximity – defined as the travel time from the farm to the central market of Addis Ababa – affects the production decisions of Ethiopian dairy farmers. We sampled 870 households from the major rural production zones around Addis Ababa, where villages were stratified according to their distance to Addis Ababa.
By Sara Gustafson
Photo credit: CGIAR
In recent years, value chain development (VCD) in the agrifood system has been hailed as a practical way to expand market access for smallholder producers, reduce poverty, enhance environmental sustainability, and improve food security and gender equity. Despite significant investments in VCD from governments, donors, and NGOs, however, evidence regarding the effectiveness of VCD interventions in addressing these important development goals remains lacking. Many existing studies have focused on the design and outputs of VCD interventions themselves rather than on their outcomes and impacts. As a result, the true reach of these programs remains unknown, particularly for poor populations.
A recent webinar from the CGIAR Research Program on Policies, Institutions, and Markets (PIM) and IFPRI’s Food Security Portal examined several important findings from a new book, Value Chain Development and the Poor: Promise, delivery, and opportunities for impact at scale, that aims to fill this gap in knowledge. The book contains a collection of case studies and lessons learned from VCD interventions in Latin America, Africa, and Southeast Asia, with chapters written by researchers and development practitioners to provide an in-depth examination of VCD in both theory and in practice.
Erwin Bulte, Professor of Development Economics at Wageningen University, provided opening remarks and introduced the three editors who led the webinar presentations and discussion.
Jason Donovan, Senior Economist at the International Maize and Wheat Improvement Center (CIMMYT), provided an overview of the rationale driving the book. He highlighted that over the past two decades, VCD has become a topic of strong interest for not only governments and NGOs but also private sector industry actors. During the same period, value chain approaches have been adopted throughout other development areas as well, including food systems, health and nutrition, economic development, and gender equity. However, fundamental questions surrounding what works and what doesn’t in terms of VCD remain unexplored.
Donovan also summarized several key topics from the book. The first, issue-attention cycles, stems from the field of political science and is used to understand how issues gain and then lose public attention. The book finds that in the arena of VCD practice, there tend to be more issue-attention cycles than in the research arena. He points out that issue-attention cycles can be positive when innovations stem from lessons learned during implementation and when there is knowledge sharing between researchers and practitioners. However, these cycles can be negative when issues remain unaddressed from cycle to cycle, when new approaches fail to address the true complexity of VCD, and when competition among researchers and practitioners impedes knowledge sharing and innovation.
“It’s okay for an issue to come and go as long as we’re sort of building over time our understanding of what works and what doesn’t work and how to do things better,” Donovan explained.
The second topic Donovan discussed was cooperatives and the expectations the development world has held for these groups over time. These include helping smallholders access higher value markets and agricultural extension services. He drew on a case study of four emerging cocoa cooperatives in Peru, which found that these groups face several daunting challenges, including difficulty establishing relationships between buyers and members, inability to provide higher prices to their members, limited capital and lack of access to financing, and difficulty completing contracts.
“This has huge implications for value chain development,” Donovan pointed out, “if the key link between buyers and smallholders is the cooperative.”
Finally, Donovan discussed VCD implementation, drawing from a case study of four interventions in Nicaragua. The case study looked at how international NGOs are leading the design and implementation of VCD programs, particularly how they use existing tools like the VC Knowledge Portal to address the complexities of VCD. The study found that NGOs take a formulaic approach to the design and implementation of VCD interventions. They tend to use a single tool, focus on technical assistance and training rather than relationship building, limited oversight of local NGOs and cooperatives, and limited engagement with other stakeholders (researchers, additional value chain actors, etc.). These findings highlight the need for a broader approach to VCD that combines multiple tools, encourages deeper collaboration across value chains, and focuses on evidence-based reflection and learning.
Jon Hellin, Head of the Sustainable Impact Platform at the International Rice Research Institute (IRRI), next presented on the topic of impact bonds in the context of coffee and cocoa value chains in Peru. Impact bonds use a pay-for-success contract that replaces upfront financing by donors and allows private investors and financial markets to share in the risk of a social development program. Hellin highlighted several important lessons learned from this case study. It takes a significant amount of time to prepare the design of an impact bond and to train staff in the more substantial project monitoring needed; as a result, these bonds carry high transaction costs. Despite these challenges, however, these bonds also drove a dramatic shift in the donor-implementer relationship, with more emphasis placed on safeguarding the rate of return and thus ensuring the success of the program. Ultimately, this benefits communities in which these programs are implemented.
“There are clear advantages of this model over conventional development projects and grants,” Hellin concluded, “but a lot of experimentation and fine-tuning is still to be done.”
Hellin also presented a review of seven tools for gender-equitable VCD, which has become a prominent topic in VCD over the past few years. The review that all of the guides effectively argued for the inclusion of gender equity in the design of VCD programs. However, several important gaps remain in the coverage of the methodologies used in these guides. These include examining how women and men participate in collective enterprises like cooperatives; how societal norms impact gender relations; how to use VCD to address inequities; and how to link gender-equity tools to other VCD tools and methodologies. These gaps highlight the need for both conceptual and methodological innovations to better address issues of gender in VCD design and implementation.
Hellin concluded the presentation portion of the webinar with a review of the book’s overall messages. One of the most important of these is the call for greater cooperation among VCD actors. “There is a need for deeper collaboration among practitioners and researchers in order to learn together how to address the ‘how’ and the ‘what now’ questions,” he said.
After a Q&A session, Frank Place, Director of PIM, provided closing remarks. “The topic of value chain development is very, very complex,” he reiterated. “The case studies in this book all provide insights into that. . . We need to deploy many types of tools and cast them wide enough to capture that complexity.”