value chain development and rural poverty reduction: knowledge gaps and a potential role for icraf
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Value chain development and rural poverty reduction: Knowledge gaps and a potential role for ICRAFTRANSCRIPT
Value chain development Value chain development
and rural poverty reductionand rural poverty reduction
Knowledge gaps and a potential role for ICRAFKnowledge gaps and a potential role for ICRAF
Staff Seminar SeriesICRAF HQ, Nairobi, Kenya
February 28, 2012
Jason Donovan, Ph.D.Jason Donovan, Ph.D.
ICRAF – Latin AmericaICRAF – Latin America
ContentContent
1) What we know and think we know about the poverty impacts of value chain development
2) Knowledge gaps
3) The “5Capitals” assessment tool
4) Lessons learned in the design of 5Capitals
5) Proposal for ICRAF’s value chain work in CRP2
Note: VCD = value chain development VC = value chain
What we know about VCD and poverty reduction
What we know about VCD and poverty reduction
Beginning in 2000s: proliferation of VCD in response to poverty-related MDGs
VCD is complex, involving various actors with different motives existing assessment tools focus on few basic indicators
Incomplete picture of the VCD impacts: 2007: GTZ conference on value chains 2010: Humphrey & Navas-Alemán
Some reasons for concern: limited poverty reduction in response to non-traditional ag. export programs
What we think we know about VCD and poverty reduction
What we think we know about VCD and poverty reduction
VC framework is necessary, but insufficient for designing interventions that address rural poverty Need for complementary conceptual frameworks
Asset endowments matter: poor households and small enterprises require minimum assets to benefit from VCD
Asset-based approach provides a useful framework for considering poverty (Moser 1998); however, limited application of approach for assessment and design of interventions
Services embedded in the chain are important, but likely insufficient for helping the poorest to meet asset thresholds
External services are also critical: need for range of services at the right time and in the right combination
Knowledge gapsKnowledge gaps
Can smallholders build assets and reduce their vulnerability through participation in VCD?
Can small businesses build their assets and evolve into viable businesses in response to VCD?
How inclusive is VCD? Can the poor meet thresholds?
Do positive and negative feed-back loops exist and what are the related implications for asset building?
Given the diversified livelihoods of rural households, are they able to intensity their participation in VCs?
What is the potential for an asset-based approach to assess VCD, taking into account the tradeoffs between rigor and user friendliness?
“5Capitals” assessment tool “5Capitals” assessment tool
Salient features
Multi-scale and multi-dimensional
Impact pathways, with pre-defined set of expected outcomes
Focus on changes in livelihood assets for understanding poverty impacts
Focus on changes in business assets for understanding business performance impacts
Designed with over 4 years with two interactions of inputs from development practitioners and researchers
Collaboration for tool designCollaboration for tool design
Process
2007: Ford Foundation hired CATIE for reviewing existing knowledge on the poverty impacts of VCD lack of appropriate tools
2007-09: Tool design – Phase 1
2009-11: Tool design – Phase 2 (with ICRAF included as key partner)
2012-?: More rigorous implementation for addressing knowledge gaps and refining tool
Partners
CATIE + CG (ICRAF, CIP, Bioversity) + NGOs + consultants + Ford Foundation
Asset-based approach for assessing VCDAsset-based approach for assessing VCD
Regional and local markets
Product 1
Product 2
International market
Product 3
Contextpolitical – legal – institutional – market – cultural
Remittances Off farm work
Market oriented
agriculture
Subsistance agriculture
Household assets
+
To what extent do diversified rural livelihoods allow for the building of assets in response to VCD?
Enterprise level
interventions
Community 1 Community 2 Community 3
Project 2
Household level
interventions
State agency
Cooperative
Provider of financial services
Buyer 1
Project 1NGO
Farm
ing
hous
ehol
dsS
ME
s (C
oops
,
Ass
ocia
tions
)
Buy
ers
/
proc
esso
rs
Ret
aile
rs
Con
sum
ers
Asset-based VC assessmentAsset-based VC assessment
Changes: Asset endowments
of farming households
Changes:Asset endowments
of upstream enterprises
VCD interventions
Human capital• Knowledge and skills for business
administration • Good manufacturing practices,
including labor safety• Capacities and skills to meet the
service needs of affiliated producers• Inclusiveness of the workforce
Social capital• Intensified asset building through
linkages with affiliated producers • Intensified asset building through
linkages with buyers and service providers
• Influence on enabling conditions through linkages with decision makers
Physical capital• Buildings and other infrastructure• Machinery, equipment, tools
VCD outcome domains Expected VCD impacts
• Better economic performance
• Higher client satisfaction
• Increased social benefits for local communities and society
• Lower environmental impact
• Higher response capacity to new market and policy trends
• Gender equity
Financial capital• Cash flows and debt levels• Working capital• Investment capacity
Enabling conditions• Access to public infrastructure and
services• Access to government programs
• Input provision
• Technical services
• Business services
• Financial services
• Changes in the political-legal and regulatory frameworks
Impact pathway - householdsImpact pathway - households
VCD interventions
Human capital• Knowledge and skills for business
administration • Good manufacturing practices,
including labor safety• Capacities and skills to meet the
service needs of affiliated producers• Inclusiveness of the workforce
Social capital• Intensified asset building through
linkages with affiliated producers • Intensified asset building through
linkages with buyers and service providers
• Influence on enabling conditions through linkages with decision makers
Physical capital• Buildings and other infrastructure• Machinery, equipment, tools
VCD outcome domains Expected VCD impacts
• Better economic performance
• Higher client satisfaction
• Increased social benefits for local communities and society
• Lower environmental impact
• Higher response capacity to new market and policy trends
• Gender equity
Financial capital• Cash flows and debt levels• Working capital• Investment capacity
Enabling conditions• Access to public infrastructure and
services• Access to government programs
• Input provision
• Technical services
• Business services
• Financial services
• Changes in the political-legal and regulatory frameworks
Impact pathway - small businessesImpact pathway - small businesses
Case studies – Phase 1Case studies – Phase 1
Partner Chain Country
Bioversity International Organic banana Bolivia
CRS Plantain El Salvador
CATIE & LWR Certified coffee Nicaragua
CATIE & Technoserve Taro root Nicaragua
University of Plymouth& Swisscontact
Dairy Sri Lanka
MEDA Handicraft Pakistán
M. Harper & R. Roy Frozen shrimp India
EDA Honey India
LWR Basic grains Burkina Faso
KIT & BioRe Organic cotton Tanzania
KIT & FAIDA-MaLi Allan Blackia nut Tanzania
Case studies – Phase 2Case studies – Phase 2
Partner Chain Country
AIACA Handicrafts India
CEDO Bean seeds Uganda
Bioversity International Platain Dominican Republic
R. Roy & M. Harper Chicken India
Aimee Russillo &Winrock-Wallace Center
Organic produce USA
Intercooperation Beans Ecuador
Technoserve Coffee Colombia
Swisscontact Dairy Bolivia
Technoserve Fresh horticulture Colombia
Farm ConcernInternational, KARI
African vegetables Kenia
MEDA Fresh horticulture Afghanistan
Lessons learned in case studiesLessons learned in case studies Asset-based approaches are powerful tools to design and
assess value chain interventions
…but they require systems thinking, critical analysis and willingness to dig deeper
The middle ground between rigor and ease-of- implementation continues to be elusive
Lighter tools as possible entry point but no substitute for full-fledged impact assessment
Complementary tools needed to determine impact at other levels (e.g., intra-household, community)
Attitude matters: 5Captials is useful only when applied by those with a commitment to poverty reduction; openness to mutual learning; and willingness to admit failures
Lessons learned in case studiesLessons learned in case studies To effectively build assets in response to VCD,
households need a minimum level of asset endowments
For those above the asset threshold, VCD has greater potential to stimulate asset building and related positive feedback loops (“VCD ready")
For those below the asset threshold, VCD alone has limited impacts of asset building – thus the need for development interventions that are not market-based
The high-risk, high-cost context in which the enterprises and households operates implies long and winding pathways for asset building
Despite the growing recognition of multi-dimensional poverty concepts, integrated attempts to reduce poverty through VCD have yet to emerge
Some outputs to dateSome outputs to date
Methodologies/tools (CRP 6.1)Donovan & Stoian, with contributions from Thiele, Ratner & Katerberg (2012) 5Captials: A tool for assessing the poverty impact of value chain development. Donovan & Stoian (Eds.) (2012) Does Value Chain Development Reduce Poverty? A Case-Study Companion to the 5Captials Assessment Tool.
Peer-reviewed publicationsStoian et al (2012) VCD for Rural Poverty Reduction: A Reality Check and a Warning. ED&M. Donovan & Poole (2012) Asset Building in Response to VCD: Lessons from Taro Producers in Nicaragua. IJAS. Garming et al. (2011) Farmers' Community Enterprise for Marketing Organic Bananas from Alto Beni, Bolivia. ED&M Katerberg et al. (2011) Evaluating Value Chain Impact Using a Sustainable Livelihoods : Study Horticulture in Afghanistan. ED&M
What we still don’t knowWhat we still don’t know How can VCD interventions better respond to different
contexts and rural populations with different asset endowments?
Under what circumstances can positive feedback loops be achieved through VCD? (and can negative ones be avoided?)
How effective are collective enterprises in helping to build the assets of their member households?
What are the options for building synergies between VCD interventions and other types of interventions by the private and public sector? (joint investments?)
The potential for 5Captials to improve the design of VCD interventions (ex-ante assessment)
ICRAF in CRP 2.2 (Linking small producers to markets)
ICRAF in CRP 2.2 (Linking small producers to markets)
Development opportunity: Increased contribution of the production and marketing of underutilized fruits for strengthening rural livelihoods; combined with increased demand for fruits/veggies in South
Development problem: Major barriers on the supply and demand side
Potential solution: value chain development, combined with more enabling business environment, related to the production and marketing of underutilized fruits
Potential role for ICRAF: ex-ante assessment of VCD options using the 5Captials tool
ICRAF in CRP 2.2 (Linking small producers to markets)
ICRAF in CRP 2.2 (Linking small producers to markets)
General objective: identify effective options for building viable, pro-poor value chains for underutilized fruits (UUF) in Peru, Cameroon, and Kenya
Specific objectivesIdentify the potential of small-scale enterprises that buy and process UUF to benefit from VCDIdentify the potential of smallholders that produce UUF to participate in and benefit from VCDGenerate new insights for improving the design of VCD interventions and on the design of 5Captials
ICRAF in CRP 2.2 (Linking small producers to markets)
ICRAF in CRP 2.2 (Linking small producers to markets)
Implementation period2012-2015
Key activities:Stage 1: Analysis of value chain contextState 2: Ex-ante assessment of 2 existing or potential value chains using 5Captials
Data collection methods:Household surveysKey informant interviews, review of secondary information, focus groups
Key ICRAF staff:Jason D., Amos G., Judith O. Steve F., and N.N.