Pro-poor value chain approaches in agricultural and rural development

Value chains for development - Introduction

1. Introduction

2. Approach

3. Research

4. Services

5. Key projects

1. Introduction 

A targeted effort is needed to include poorer households in integrated supply chains: technical upgrading, organizational and managerial development and access to working capital are all required to enhance smallholder participation. The KIT Chains programme was set up to address these issues.

2.  Approach

We work on rural poverty alleviation by developing value chains that benefit smallholder producers in the South. We integrate three dimensions of sustainability: social, ecological and economic sustainability or – “people, planet, profit”. We do this in two ways:
- Research. As an expertise centre, we generate and disseminate knowledge and methods for pro-poor chain development. Building on best practice, we design innovative public-private partnerships, models and tools to involve business in poverty alleviation. We generate knowledge through action research and share the lessons learned with practitioners and policy-makers.
- Services. As facilitators of chain development, we match producers to business partners and investors, and facilitate learning and innovation by establishing multi-stakeholder platforms. We assist smallholder producers to build their capacity to participate in supply chains, and we assist European companies to strengthen their corporate social responsibility. Our role is to ensure that business partners find each other, that expertise is available, and that business ventures deliver benefits to the poor.

3. Research

 Research work is organized around six knowledge themes:

1. Chain empowerment: This theme will generate knowledge and methods for improving the performance of producer organizations, service providers and SMEs (small and medium enterprises) in value chains.
How to strengthen capacities in chain activities and chain governance? How to encourage more efficient value chain cooperation? How the bridge the gap between not-for-profit and profit organizations? How to stimulate institutional and technological innovation in the chain? How to make donor interventions more effective and sustainable? How to stimulate learning capacities? How to monitor and measure impacts?
We will support local support agencies and their partners in learning processes around these questions so as to increase the effectiveness of their work. Concrete activities include facilitation of learning alliances, documentation of experiences (writeshops), training activities, applied research, and design of practical tools and methodologies.

2. Regional and urban markets: This theme will generate knowledge and methods for optimizing value chains for local and regional markets in low-income countries.
What are the new market conditions and opportunities triggered by urbanization, regional trade and new cultural trends? How to streamline traditional, fragmented marketing channels into coordinated value chains? How to encourage a transition from supply-driven to demand-driven food production? How to add value through branding, technical upgrading, identity-based products, and other innovations? How to generate more economic spin-off at local level through new modes of cooperation with local and national governments?
Local partners in value chain development will be supported with applied research and the analysis of lessons learnt. We will enhance our understanding of trends observed in domestic market developments and associated challenges for local producers, and deepen knowledge around product branding. This understanding will be used for policy advice to partner organizations, and local and national governments. Capacity development of partners will be prioritized in the field of value chain development for domestic markets.

3. Financial services for value chains: This theme will generate knowledge and methods for streamlining value chain development through innovative financial services. In-between the micro-finance revolution and traditional large-scale project finance, there is a “missing middle” of producer organizations and SMEs who lack access to financial services to sustain their business operations and make investments for further growth. As a result their businesses do not grow beyond a certain stage.
What are the capital needs of small entrepreneurs in value chains? What are best practices in financial product innovation for value chain development? How can new forms of chain cooperation help to overcome financial gaps? How can donors intervene effectively?
We will organize a writeshop with innovative financial institutions in low-income countries in order to capture best practice. We will foster partnerships to bridge the gap that currently exists between financial institutions on the one hand, and organizations involved in value chain development on the other.

4. Sustainable procurement: This theme will generate knowledge and methods for involving European companies in poverty alleviation through purchase management. What are the (potential) drivers for these companies to get involved in pro-poor procurement? What are the opportunities and limitations? What are the implications for internal processes and structures? What are the needs for external support and assistance?
The outcomes of future action-research pilots with selected companies will be shared in business forums. From those discussions we will set up new action-research activities with private companies and we will publish results. We aim to contribute to a PhD research project on the relationship between purchase management and poverty alleviation. The Partnership for Sustainable Trade which is being established will create a framework under which this theme can operate and deliver results.

5. Business against poverty: This theme will generate knowledge and methods for setting up profitable companies that contribute to poverty alleviation as part of their core business.
How can such companies be designed and sustainably financed? What are the appropriate investment and governance structures? What is their impact on poverty reduction? What are the roles of public and private actors? How to measure the “additional effort” that legitimizes public investment? What are the opportunities and limitations to involve not-for-profit organizations and smallholders as shareholders?
We will address these questions through action-research around real-life business cases, and systematize these experiences (and those of third parties) in a series of publications around specific issues and the design of working tools for dissemination to organizations in profit and not-for-profit sectors.

6. Public-private partnerships (PPPs): This theme will generate knowledge and tools about public-private partnerships for pro-poor growth. Two factors generally justify public support in private sector activities: a) the long time horizon of benefits from investing in environmentally friendly growth, and b) the public social benefits of pro-poor growth. How can public agencies support companies to increase their pro-poor and environmentally sustainable impacts? Where do companies draw the line between private and public investments? How to measure the “additional effort” that legitimizes public investment? How to design and implement effective pro-poor governance in PPPs? How can PPPs be set up in the areas of local economic development and distribution of medicines?
A writeshop will organized to systematize experiences from our own PPP cases (e.g. Sustainable Tuna Fisheries, Ghana) as well as cases such as the GTZ PPP programme and the DFID Business Challenge Fund.

4. Services

KIT Chain services include:

- Chain mapping and assessment
Feasibility and market studies; sector analysis, mapping the business and policy environment; mapping and profiling the chain actors; assessing farmers and their organizations.

- Building engagement
Matchmaking and partnering, including identifying common and conflicting issues; identifying chain leaders and facilitators; strengthening linkages and building trust; developing a joint chain strategy, facilitating chain platforms.

- Chain development
Identifying and implementing strategies to improve supply chains; strengthening producer organizations; bridging capacity gaps; developing entrepreneurship; supporting chain platforms.

- Chain monitoring and evaluation
Monitoring chain development and evaluation of its economic, social, pro-poor and environmental impacts.

- Learning and innovation
Learning from operational experience; facilitating learning alliances; policy research on market restructuring; developing tools for private sector engagement.

5. Key projects 

- Pro-poor fruit and vegetable chains in Mali
Facilitation of pro-poor value chain development for crops such as onions, tomatoes, mangoes and sesame by linking producers to business partners, by building capacity in processing and by creating multi-stakeholder platforms for chain optimization.

- Chain empowerment: supporting African farmers to develop markets
We organized a ”writeshop” with 30 practitioners involved in pro-poor value chain development in Africa in order to learn from experience and categorize chain development strategies.

- Connecting People, Markets and Values
Based on a series of pilot business ventures between companies in the Netherlands and small-scale entrepreneurs in low-income countries, we are developing knowledge and tools to involve the private sector in market-based solutions to poverty alleviation.

- Regoverning Markets
KIT is a leading partner in this global research and policy support programme that addresses the implications for small-scale producers of concentration processes in the processing and retail sectors of national and international agrifood markets.

- Sustainable medicinal plant chain in India
Facilitation of a public-private partnership between a Dutch importer, an Indian exporter, and fifty local farmers to cultivate and export Kutki, a CITES-listed (endangered) medicinal plant previously collected in the wild.

- Sustainable tuna fishing in Ghana
Facilitation of a public-private partnership between Ghanaian and Dutch companies and local small-scale fishermen to develop a sustainable chain for fresh, line-fished tuna.