Value chain development for rural poverty reduction: A reality check and a warning
Over the past decade, the value chain development approach has increasingly been adopted by governments, donors, and NGOs to reduce rural poverty. The design of related interventions often assumes that poor households: 1) have sufficient resources to effectively participate in value chain development; 2) do not face substantial trade-offs when using these resources; and 3) are able to assume higher risks when reinvesting capital and labour. However, insights from our own experiences and the literature show that these assumptions often do not reflect the realities and the needs of the poor. We argue that value chain development with poor and vulnerable populations, particularly in rural areas, requires additional conceptual frameworks, analyses, and interventions. In particular, we encourage donor agencies and development practitioners to adopt an asset-based approach to the design, implementation, and assessment of target value chains and to identify the non-market interventions needed for enabling particularly disenfranchised groups to meet the minimum asset thresholds for their successful participation in value chain initiatives.Altenburg, T. (2007) Donor Approaches to Supporting Pro-poor Value Chains [website], report prepared for the Donor Committee for Enterprise Development - Working Group on Linkages and Value Chains, German Development Institute (DIE), Bonn, Germany <www.value-chains.org/dyn/bds/docs/568/DonorApproachestoPro-PoorValueChains.pdf≯ [last accessed 24 January 2012]. www.value-chains.org/dyn/bds/docs/568/DonorApproachestoPro-PoorValueChains.pdf
Arora, S. and Romijn, H. (2009) Innovation for the Base of the Pyramid: Critical Perspectives from Development Studies on Heterogeneity and Participation [website], United Nations University/Maastricht Economic and Social Research and Training Centre on Innovation and Technology, Maastricht, the Netherlands <www.merit.unu.edu/publications/wppdf/2009/wp2009-036.pdf≯ [last accessed 24 January 2012]. www.merit.unu.edu/publications/wppdf/2009/wp2009-036.pdf
Charette, D. (2011) A Portfolio Approach to Value Chain Development Programs, MicroREPORT #169, USAID, Washington, DC.
DFID (Department for International Development) and SDC (Swiss Development Corporation) (2008) A Synthesis of the Making Markets Work for the Poor (M4P) Approach, SDC, Berne, Switzerland.
Donovan, J. and Poole, N. (2011) ‘Asset building in response to value chain development: Evidence from specialty smallholder coffee producers in Nicaragua’, ICRAF Working Paper 138, World Agroforestry Centre, Nairobi, Kenya.
Donovan, J. and Stoian, D. (with contributions from Antezana, I., Belt, J., Clark, S., Harper, M., Poole, N., Ruddick, S. and Waagbo, J.) (2010) Assessing the Impact of Value Chain Approaches on Rural Poverty, Methodological Guidelines for Development Practitioners and Private Sector Representatives, CATIE, Turrialba, Costa Rica.
Fowler, B. and Brand, M. (2011) Pathways Out of Poverty: Applying Key Principles of the Value Chain Approach to Reach the Very Poor, Discussion Paper/Microreport#173, USAID, Washington, DC.
Haddad, L., Lindstrom, J. and Pinto, Y. (2010) ‘The sorry state of M&E in agriculture: Can people-centred approaches help?’ IDS Bulletin 41: 6-25.
Humphrey, J. and Navas-Alemán, L. (2010) ‘Value chains, donor interventions and poverty reduction: A review of donor practice’, IDS Research Report 63, IDS, Brighton, UK.
Jones, H. (2011) ‘Taking responsibility for complexity: When is a policy problem complex, why does it matter, and how can it be tackled?’ ODI Briefing Paper 68, ODI, London.
Kula, O., Downing, J. and Field, M. (2006) ‘Value chain programmes to integrate competitiveness, economic growth and poverty reduction’, Small Enterprise Development 17: 23-35.
McKay, A. (2009) ‘Assets and chronic poverty: Background paper’, Chronic Poverty Research Centre Working Paper 100, University of Sussex, Brighton, UK <www.chronicpoverty.org/uploads/publication_files/WP100%20McKay_1.pdf≯ [last accessed 24 January 2012]. www.chronicpoverty.org/uploads/publication_files/WP100%20McKay_1.pdf
Porter, M.E. and Kramer, M.R. (2011) ‘Creating shared value: How to reinvent capitalism - and unleash a wave of innovation and growth’, Harvard Business Review (Jan-Feb 2011): 2-17.
Stoian, D. and Donovan, J. (2007) ‘Value chain development from a livelihoods perspective: A multi-chain approach for coffee and cacao producing households in Central America’, in E. Tielkes (ed.), Utilisation of Diversity in Land Use Systems: Sustainable and Organic Approaches to Meet Human Needs. Tropentag 2007 - International Research on Food Security, Natural Resource Management and Rural Development, Kassel-Witzenhausen, Germany, 9-11 October 2007.
Tanburn, J. and Sen, N. (2011) Why Have a Standard for Measuring Results? Progress and Plans of the Donor Committee for Enterprise Development, DCED, London.
UN (United Nations) (2011) The Millennium Development Goals Report 2011, UN, New York.
UNIDO (United Nations Industrial Development Organization) (2011) Pro-poor Value Chain Development: 25 Guiding Questions for Designing and Implementing Agroindustry Projects, UNIDO, Vienna, Austria.
Webber, C.M. and Labaste, P. (2010) Building Competitiveness in Africa's Agriculture: A Guide to Value Chain Concepts and Applications, World Bank, Washington, DC.
Altenburg, T. (2007) Donor Approaches to Supporting Pro-poor Value Chains [website], report prepared for the Donor Committee for Enterprise Development - Working Group on Linkages and Value Chains, German Development Institute (DIE), Bonn, Germany <www.value-chains.org/dyn/bds/docs/568/DonorApproachestoPro-PoorValueChains.pdf≯ [last accessed 24 January 2012]. www.value-chains.org/dyn/bds/docs/568/DonorApproachestoPro-PoorValueChains.pdf
Arora, S. and Romijn, H. (2009) Innovation for the Base of the Pyramid: Critical Perspectives from Development Studies on Heterogeneity and Participation [website], United Nations University/Maastricht Economic and Social Research and Training Centre on Innovation and Technology, Maastricht, the Netherlands <www.merit.unu.edu/publications/wppdf/2009/wp2009-036.pdf≯ [last accessed 24 January 2012]. www.merit.unu.edu/publications/wppdf/2009/wp2009-036.pdf
Charette, D. (2011) A Portfolio Approach to Value Chain Development Programs, MicroREPORT #169, USAID, Washington, DC.
DFID (Department for International Development) and SDC (Swiss Development Corporation) (2008) A Synthesis of the Making Markets Work for the Poor (M4P) Approach, SDC, Berne, Switzerland.
Donovan, J. and Poole, N. (2011) ‘Asset building in response to value chain development: Evidence from specialty smallholder coffee producers in Nicaragua’, ICRAF Working Paper 138, World Agroforestry Centre, Nairobi, Kenya.
Donovan, J. and Stoian, D. (with contributions from Antezana, I., Belt, J., Clark, S., Harper, M., Poole, N., Ruddick, S. and Waagbo, J.) (2010) Assessing the Impact of Value Chain Approaches on Rural Poverty, Methodological Guidelines for Development Practitioners and Private Sector Representatives, CATIE, Turrialba, Costa Rica.
Fowler, B. and Brand, M. (2011) Pathways Out of Poverty: Applying Key Principles of the Value Chain Approach to Reach the Very Poor, Discussion Paper/Microreport#173, USAID, Washington, DC.
Haddad, L., Lindstrom, J. and Pinto, Y. (2010) ‘The sorry state of M&E in agriculture: Can people-centred approaches help?’ IDS Bulletin 41: 6-25.
Humphrey, J. and Navas-Alemán, L. (2010) ‘Value chains, donor interventions and poverty reduction: A review of donor practice’, IDS Research Report 63, IDS, Brighton, UK.
Jones, H. (2011) ‘Taking responsibility for complexity: When is a policy problem complex, why does it matter, and how can it be tackled?’ ODI Briefing Paper 68, ODI, London.
Kula, O., Downing, J. and Field, M. (2006) ‘Value chain programmes to integrate competitiveness, economic growth and poverty reduction’, Small Enterprise Development 17: 23-35.
McKay, A. (2009) ‘Assets and chronic poverty: Background paper’, Chronic Poverty Research Centre Working Paper 100, University of Sussex, Brighton, UK <www.chronicpoverty.org/uploads/publication_files/WP100%20McKay_1.pdf≯ [last accessed 24 January 2012]. www.chronicpoverty.org/uploads/publication_files/WP100%20McKay_1.pdf
Porter, M.E. and Kramer, M.R. (2011) ‘Creating shared value: How to reinvent capitalism - and unleash a wave of innovation and growth’, Harvard Business Review (Jan-Feb 2011): 2-17.
Stoian, D. and Donovan, J. (2007) ‘Value chain development from a livelihoods perspective: A multi-chain approach for coffee and cacao producing households in Central America’, in E. Tielkes (ed.), Utilisation of Diversity in Land Use Systems: Sustainable and Organic Approaches to Meet Human Needs. Tropentag 2007 - International Research on Food Security, Natural Resource Management and Rural Development, Kassel-Witzenhausen, Germany, 9-11 October 2007.
Tanburn, J. and Sen, N. (2011) Why Have a Standard for Measuring Results? Progress and Plans of the Donor Committee for Enterprise Development, DCED, London.
UN (United Nations) (2011) The Millennium Development Goals Report 2011, UN, New York.
UNIDO (United Nations Industrial Development Organization) (2011) Pro-poor Value Chain Development: 25 Guiding Questions for Designing and Implementing Agroindustry Projects, UNIDO, Vienna, Austria.
Webber, C.M. and Labaste, P. (2010) Building Competitiveness in Africa's Agriculture: A Guide to Value Chain Concepts and Applications, World Bank, Washington, DC.
Altenburg, T. (2007) Donor Approaches to Supporting Pro-poor Value Chains [website], report prepared for the Donor Committee for Enterprise Development - Working Group on Linkages and Value Chains, German Development Institute (DIE), Bonn, Germany <www.value-chains.org/dyn/bds/docs/568/DonorApproachestoPro-PoorValueChains.pdf≯ [last accessed 24 January 2012]. www.value-chains.org/dyn/bds/docs/568/DonorApproachestoPro-PoorValueChains.pdf
Arora, S. and Romijn, H. (2009) Innovation for the Base of the Pyramid: Critical Perspectives from Development Studies on Heterogeneity and Participation [website], United Nations University/Maastricht Economic and Social Research and Training Centre on Innovation and Technology, Maastricht, the Netherlands <www.merit.unu.edu/publications/wppdf/2009/wp2009-036.pdf≯ [last accessed 24 January 2012]. www.merit.unu.edu/publications/wppdf/2009/wp2009-036.pdf
Charette, D. (2011) A Portfolio Approach to Value Chain Development Programs, MicroREPORT #169, USAID, Washington, DC.
DFID (Department for International Development) and SDC (Swiss Development Corporation) (2008) A Synthesis of the Making Markets Work for the Poor (M4P) Approach, SDC, Berne, Switzerland.
Donovan, J. and Poole, N. (2011) ‘Asset building in response to value chain development: Evidence from specialty smallholder coffee producers in Nicaragua’, ICRAF Working Paper 138, World Agroforestry Centre, Nairobi, Kenya.
Donovan, J. and Stoian, D. (with contributions from Antezana, I., Belt, J., Clark, S., Harper, M., Poole, N., Ruddick, S. and Waagbo, J.) (2010) Assessing the Impact of Value Chain Approaches on Rural Poverty, Methodological Guidelines for Development Practitioners and Private Sector Representatives, CATIE, Turrialba, Costa Rica.
Fowler, B. and Brand, M. (2011) Pathways Out of Poverty: Applying Key Principles of the Value Chain Approach to Reach the Very Poor, Discussion Paper/Microreport#173, USAID, Washington, DC.
Haddad, L., Lindstrom, J. and Pinto, Y. (2010) ‘The sorry state of M&E in agriculture: Can people-centred approaches help?’ IDS Bulletin 41: 6-25.
Humphrey, J. and Navas-Alemán, L. (2010) ‘Value chains, donor interventions and poverty reduction: A review of donor practice’, IDS Research Report 63, IDS, Brighton, UK.
Jones, H. (2011) ‘Taking responsibility for complexity: When is a policy problem complex, why does it matter, and how can it be tackled?’ ODI Briefing Paper 68, ODI, London.
Kula, O., Downing, J. and Field, M. (2006) ‘Value chain programmes to integrate competitiveness, economic growth and poverty reduction’, Small Enterprise Development 17: 23-35.
McKay, A. (2009) ‘Assets and chronic poverty: Background paper’, Chronic Poverty Research Centre Working Paper 100, University of Sussex, Brighton, UK <www.chronicpoverty.org/uploads/publication_files/WP100%20McKay_1.pdf≯ [last accessed 24 January 2012]. www.chronicpoverty.org/uploads/publication_files/WP100%20McKay_1.pdf
Porter, M.E. and Kramer, M.R. (2011) ‘Creating shared value: How to reinvent capitalism - and unleash a wave of innovation and growth’, Harvard Business Review (Jan-Feb 2011): 2-17.
Stoian, D. and Donovan, J. (2007) ‘Value chain development from a livelihoods perspective: A multi-chain approach for coffee and cacao producing households in Central America’, in E. Tielkes (ed.), Utilisation of Diversity in Land Use Systems: Sustainable and Organic Approaches to Meet Human Needs. Tropentag 2007 - International Research on Food Security, Natural Resource Management and Rural Development, Kassel-Witzenhausen, Germany, 9-11 October 2007.
Tanburn, J. and Sen, N. (2011) Why Have a Standard for Measuring Results? Progress and Plans of the Donor Committee for Enterprise Development, DCED, London.
UN (United Nations) (2011) The Millennium Development Goals Report 2011, UN, New York.
UNIDO (United Nations Industrial Development Organization) (2011) Pro-poor Value Chain Development: 25 Guiding Questions for Designing and Implementing Agroindustry Projects, UNIDO, Vienna, Austria.
Webber, C.M. and Labaste, P. (2010) Building Competitiveness in Africa's Agriculture: A Guide to Value Chain Concepts and Applications, World Bank, Washington, DC.
Altenburg, T. (2007) Donor Approaches to Supporting Pro-poor Value Chains [website], report prepared for the Donor Committee for Enterprise Development - Working Group on Linkages and Value Chains, German Development Institute (DIE), Bonn, Germany <www.value-chains.org/dyn/bds/docs/568/DonorApproachestoPro-PoorValueChains.pdf≯ [last accessed 24 January 2012]. www.value-chains.org/dyn/bds/docs/568/DonorApproachestoPro-PoorValueChains.pdf
Arora, S. and Romijn, H. (2009) Innovation for the Base of the Pyramid: Critical Perspectives from Development Studies on Heterogeneity and Participation [website], United Nations University/Maastricht Economic and Social Research and Training Centre on Innovation and Technology, Maastricht, the Netherlands <www.merit.unu.edu/publications/wppdf/2009/wp2009-036.pdf≯ [last accessed 24 January 2012]. www.merit.unu.edu/publications/wppdf/2009/wp2009-036.pdf
Charette, D. (2011) A Portfolio Approach to Value Chain Development Programs, MicroREPORT #169, USAID, Washington, DC.
DFID (Department for International Development) and SDC (Swiss Development Corporation) (2008) A Synthesis of the Making Markets Work for the Poor (M4P) Approach, SDC, Berne, Switzerland.
Donovan, J. and Poole, N. (2011) ‘Asset building in response to value chain development: Evidence from specialty smallholder coffee producers in Nicaragua’, ICRAF Working Paper 138, World Agroforestry Centre, Nairobi, Kenya.
Donovan, J. and Stoian, D. (with contributions from Antezana, I., Belt, J., Clark, S., Harper, M., Poole, N., Ruddick, S. and Waagbo, J.) (2010) Assessing the Impact of Value Chain Approaches on Rural Poverty, Methodological Guidelines for Development Practitioners and Private Sector Representatives, CATIE, Turrialba, Costa Rica.
Fowler, B. and Brand, M. (2011) Pathways Out of Poverty: Applying Key Principles of the Value Chain Approach to Reach the Very Poor, Discussion Paper/Microreport#173, USAID, Washington, DC.
Haddad, L., Lindstrom, J. and Pinto, Y. (2010) ‘The sorry state of M&E in agriculture: Can people-centred approaches help?’ IDS Bulletin 41: 6-25.
Humphrey, J. and Navas-Alemán, L. (2010) ‘Value chains, donor interventions and poverty reduction: A review of donor practice’, IDS Research Report 63, IDS, Brighton, UK.
Jones, H. (2011) ‘Taking responsibility for complexity: When is a policy problem complex, why does it matter, and how can it be tackled?’ ODI Briefing Paper 68, ODI, London.
Kula, O., Downing, J. and Field, M. (2006) ‘Value chain programmes to integrate competitiveness, economic growth and poverty reduction’, Small Enterprise Development 17: 23-35.
McKay, A. (2009) ‘Assets and chronic poverty: Background paper’, Chronic Poverty Research Centre Working Paper 100, University of Sussex, Brighton, UK <www.chronicpoverty.org/uploads/publication_files/WP100%20McKay_1.pdf≯ [last accessed 24 January 2012]. www.chronicpoverty.org/uploads/publication_files/WP100%20McKay_1.pdf
Porter, M.E. and Kramer, M.R. (2011) ‘Creating shared value: How to reinvent capitalism - and unleash a wave of innovation and growth’, Harvard Business Review (Jan-Feb 2011): 2-17.
Stoian, D. and Donovan, J. (2007) ‘Value chain development from a livelihoods perspective: A multi-chain approach for coffee and cacao producing households in Central America’, in E. Tielkes (ed.), Utilisation of Diversity in Land Use Systems: Sustainable and Organic Approaches to Meet Human Needs. Tropentag 2007 - International Research on Food Security, Natural Resource Management and Rural Development, Kassel-Witzenhausen, Germany, 9-11 October 2007.
Tanburn, J. and Sen, N. (2011) Why Have a Standard for Measuring Results? Progress and Plans of the Donor Committee for Enterprise Development, DCED, London.
UN (United Nations) (2011) The Millennium Development Goals Report 2011, UN, New York.
UNIDO (United Nations Industrial Development Organization) (2011) Pro-poor Value Chain Development: 25 Guiding Questions for Designing and Implementing Agroindustry Projects, UNIDO, Vienna, Austria.
Webber, C.M. and Labaste, P. (2010) Building Competitiveness in Africa's Agriculture: A Guide to Value Chain Concepts and Applications, World Bank, Washington, DC.
Smallholder value chains as complex adaptive systems: a conceptual framework
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