Joosten, F.J.

Vellema, S.

Zuurbier, P.J.P.

English

NARCIS 

Viable value chains and pro-poor development

Wageningen Yield 

 1 
 
 
 
 
Viable value chains and pro-poor development 
SUMMARY 
 
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Important goals in strategy and policy targeting smallholder-based commodity systems have 
been to create a certain level of stability in the market and to reduce to vulnerability of small 
producers or processors. In other words, the aim has been to construct viable value chains, 
capable to support livelihood strategies and to cope with external developments or pressures. In 
this paper we argue that this viability is related to (i) the capability to configure value chains as 
platforms for concerted action addressing issues outside the boundaries of individual production 
units, and (ii) the capacity to use the wide range of performance criteria as a starting point for 
building innovation networks embedded in local social structures tailoring technological change 
to specific conditions.  
Concerted action 
At the intervention level it should be noted that different partners utilise the value chain 
approach in different areas of intervention. Governmental development support includes the 
promotion of an enabling environment (both at international and national levels), delivery of 
support services as well as support for better inter-firm cooperation. Development organisations 
and private sector companies appear to focus particularly on inter-firm cooperation and firm 
level upgrading. However, their orientation and interests can be quite different in doing so. On 
the whole the interventions of the various partners are fairly complementary. The effectiveness 
of supply chain interventions may benefit if more coordination between the various players 
takes place. 
 
International support organisations and bilateral donors may wish to familiarise themselves with 
prevailing patterns of pursuing regulatory functions in a market-economic environment before 
getting involved in supply chain governance programmes and projects. Public-private 
partnerships or public sector capacity building in implementing market regulatory functions are 
not to be viewed as defined approaches towards introducing improved supply chain governance 
systems. Identification of the main driving forces behind the prevailing market regulatory 
functions and studying existing patterns of public sector roles may hold the key to determining 
the most effective approach to public sector involvement in governing certain aspects of agri-
food supply chain performance and developments. 
 2 
Innovation 
The paper suggest that some form of coordinated innovation, in which both market opportunities 
and institutional arrangements are integrated, may be needed to enhance the innovative 
capacities of chain actors and surrounding organisations. Also, strategic policy, both in the 
public and private spheres, is needed to relate more radical technological innovation to the 
processes of incremental change and adaptation usually attached to tangible applications in 
business. This opens opportunities for relating commercially grounded arrangements in value 
chains and markets to the institutionalised arrangements in innovation networks. Installing feed 
back mechanisms and facilitating interactions appears to be more important than focusing on the 
organisational forms of technological innovation.  
 
Building such a collaborative model, instead of relying solely on economic efficiencies and 
standardized practices, requires purposive and strategic interventions and investments by chain 
actors in alliance with other players. Obviously, there is no blue print for this, but three topical 
terrains for arranging technological change in value chains differently are suggested:  
1. a focus on interactions in a nation or region-based evolving innovation system clustering 
various functions and activities;  
2. the conception of users of technology as buyers of technological innovations in local 
markets at the lower end of the economic pyramid, and: 
3. the value of embedding performance improvement in a process of reengineering existing 
institutional structures rather than constructing an agri-food chains based on ideal 
conditions.  
 
Policy implications 
Most of the literature studies already provide implications for policy support for establishing 
supply chain integration: 
1. giving access of smallholders to supply chains by reducing entry costs and risks by 
(micro-)financing mechanisms 
2. establishing legal and institutional frameworks that enable creating value chain 
governance structures 
3. encouraging setting quality standards on voluntary basis to create market differentiation 
4. providing an institutional learning environment where education, and research and 
development go hand-in-hand. 
Many of these activities are likely based on cooperation between public actors coming from 
different institutional backgrounds (trade, agriculture, research, education) and public and 
private partnerships, if possible by non governmental organisations. Maybe this is becoming the 
main challenge: creating new institutional arrangements on the level of commodity systems and 
value chains. 
 


Viable value chains and pro-poor development

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