VALUE CHAIN THINKING: COULD IT BE USE TO MINIMIZE THE IMPACT OF GLOBALIZATION ON SMALLHOLDER FARMERS?
It’s been 5 weeks already since I, together with 25 agricultural professionals from 15 African Countries came to Australia for a short course on Agribusiness at the University of Queensland under the Australia Africa Awards. It is expected as part of the course requirement, for every fellow to have a Work Plan on Return (WPR) prepared which we will unpack throughout the course and just like everyone, I had something to present which looked just perfect in my opinion; I had thought of very thing; how to get the farmers involve, how to involve the government, locals heads and experts and in the end every farmer will be happy with the result, my team will be glad we did it and couldn’t wait to brag about how successfully my project will be implemented upon my return. Well, the 6 weeks course was just to add some sugar coating and make it more appealing.
Its been very intense packed with alternating classroom work and field visits on selecting the chain, understanding the role of each actor along the chain and how they create value or waste along the chain, what relationship exist between the actors, how does information flow and understanding consumers preference for which they are willing to pay and extra dollar. Sitting at the back of the class am wondering, where in my WPR did I even think of the consumer? After the farmers produce their crops, where does it go to? How do they know when and how to produce what?
I bet most of us operate in this way with our small scale farmers and for years it hasn’t worked. We have the most arable land with approximately 70% of our population relying on agriculture and our economies too. Still we rely on food aid and heavily on imports to feed our countries.
So what if we applied some value chain thinking into our work? Now let me give you a glimpse of what am talking about. With value chain thinking, all members of the chain work together to more efficiently deliver what consumers demand moving our focus from what is supplied to what is valued. A value chain involves collaboration; knowledge of what is happening upstream (producers) and downstream( consumers) of each business and of what consumers value and will pay for; For example a dozen of organics eggs sell at a super market for approximately $6 but when we carried out a consumer focus group, a consumer was willing to pay $10 knowing the eggs were picked from free range chicken. Once you pick out a chain, you proceed to understanding the role of all actors and ways in which value can be added through a Rapid Value Chain Analysis in which you identify what is necessary(N), what add values(V), and where is waste created(W). Where waste is created often provides opportunity for value creation.
The globalization of agrifood markets and the liberalization of world trade are creating new competitive environment for all (producers, processors and retailers) in every country with globalization driving major changes in agrifood procurement practices from traditional marketing systems to meet the emerging trends of consumer demand. To avoid complexities and supply risk, large companies tend to want to deal with farmers with access to large scale, technologically based, resource- intensive techniques – which our small holder farmers lack all the resources and skills. The inclusion of small holder farmers in the modernized procurement system appears to be mixed and if care is not taken small holder farmers may be excluded and be locked in poverty. However, with value chain approach we could identity ways to facilitate collaboration between smallholder farmers to coordinate supply, achieve scale of production and reduce risk, thus improving opportunities to sustainably increase the return for their produce and improve family livelihood.
It’s no longer safe to compete on price; we need to create value and work together to grow the pie such that everyone benefits from the increased pie size by focusing on consumers preference because in the end they are the richest in the games as every franc divided along the chain comes from the consumer. Let’s apply value chain approach to our works.