Value chain is a process by which a firm adds value to an article during production, marketing and provision of after-sales services. A sector approaches to value chain development recognizes that arriving at desired outcomes involves concerted intervention in enabling an entire chain of actors, from producers to marketing organizers, to meet market demand. According to J. Greiling et al, this might include collaborating with research and development (RD) bodies, investing, for example, in seed multiplication facilities, and establishing or identifying channels to disseminate plant material to smallholder farmers.
This requires the strengthening of local extension services for training and follow up of activities. It is quite unlikely that a single actor will have the resources or organizational capacity to coordinate all of these tasks. The starting point for business organizations and their access to markets in Ethiopia is, therefore, to bring all the key actors around the table to “discuss” how to improve the performance of the value chain as a whole. Once such consultative mechanisms are in place, the responsibility for coordination is handed over to appropriate organizations within the sector. Here, the issue is to identify the right organization that is efficient to coordinate activities as needed.
Until recently, development practitioners have worked on the assumption that change is a “simple” process that begins with individuals and organizations and then permeates into society. But, studies revealed that working with multi-actor systems not only complements earlier organizational development approaches, but it also has the potential to address development challenges more effectively. This creates more self-sustaining forms of capacity. The underlying rational is that capacity is a key goal of development that facilitates joint action towards a common goal. Such facilitation might include reinforcing connections between actors who have a common interest. Currently, in Ethiopia, the MOA plays a facilitating role to bring all actors to the service of the farmers.
A key building block in the facilitation of multi-actor change is the creation of communication channels to encourage regular consultations and interaction among all relevant stakeholders. However, the mere existence of such consultative mechanisms, often referred to as multi-stakeholder platforms, does not equate to “effective” capacity development. Committees, boards, groups and teams are created to perform only seasonal or temporary activities and they are terminated upon completion of their assigned missions. Their missions are sometimes obscure, unclear, vague or unintelligible. They are sometimes designed to “evade” the responsibility of head of an institution that is incapable of performing a given duty.
A range of support instruments that ensure growing engagement by value chain actors has led to lasting results. This support includes facilitating the establishment of multi-stakeholder platforms (MSPs), strengthening of sector associations, generating and disseminating market intelligence, supporting effective public policy management, promoting appropriate technology and financing value chain in multi-stakeholder platforms.
The first step in a program is to identify key actors within each of the projects that are covered by it. These actors may range from private sector firms to smallholder farmers. Included here are also producer organizations, government bodies and non-governmental organizations (NGOs) to research institutions and aid agencies. Representatives of each stakeholder group are invited to participate in the establishment of consultative platforms known respectively by their specialization. In the agriculture sector, for example, value chains coordinating groups may be formed for dairy, fruit, oilseeds, and honey. These may be further subdivided into value chains coordinating groups for the apple, mango and pineapple value chains under fruit categories.
Once constituted, members of each coordination group (CG) elect a chairperson who is drawn from one of the participating private sector organizations. The chairperson is assisted by a CG facilitator, a local consultant. The role of the facilitator is to organize regular meetings, ensuring that timely invitations reach out to all stakeholders. The CG facilitator is also responsible for providing adequate documentation and making sure that all meetings conclude with clear points of action and agreement on who is responsible for follow up. At an early stage, each CG is responsible for developing a strategic implementation plan containing an analysis of opportunities and constraints faced by the value chain and proposals for the way forward. In Ethiopia, the Regional Bureaus of Agriculture (RBA), following Federal MOA Guidelines, are supporting farmers to organize and engage in production and marketing.
The strategic plans drew on the considerable knowledge within the sub-sector and encouraged the participation of all members. The plans subsequently became the main guiding framework in the further development of the chain. As a catalyst for value chain development, coordination plays a key role in the initial stages by providing organizational, financial and technical resources required. Technical staff of the RBA also plays key roles within each chain that is initiated and coordinated by CG members. A number of adjustments may be required to strengthen ownership and participation, especially of farmers’ organizations in the rural areas. In the beginning, the RBA technical staff has the sole responsibility for allocating funds for value chain activities indicated in implementation plans, approved by farmers groups.
The CG may establish executive committees to decide on allocation of funds for programmed activities. These are, however, preceded by meetings, which are open for members and organizations. In this manner, the role of the CG in value chain development continued to grow and evolve. The CGs provided an important forum for value chain actors to exchange important information about new technologies, market opportunities, sources of finance, new legislation and so on. They were also instrumental in cementing business relationships. In some cases, CG help in paving the way for the emergence of strong sector associations that are contributing to improved governance of the value chains. The CG, however, face a number of challenges that could hamper their operations.
One of the challenges is “uncertainty” of institutional status as CG, which may not be a legal entity. It is proposed that future CG meetings should be convened and facilitated by established “umbrella” organizations within each RBA, some of which are set up or strengthened. Within a value chain, strengthening sector associations brings together smaller groups of sector actors to pursue common interests. Sector associations may refer to associations of farmers, processors or exporters or even organizations encompassing all of these. Strong sector organizations are important in value chain development for various reasons, two of the most important being representation and collaboration.
The number of stakeholders in a value chain varies widely, and for many agricultural sectors, it may include thousands of smallholder farmers, producers and middlemen. Since direct participation of all actors is not feasible, it is important to ensure that they are adequately “represented” in value chain governance mechanisms. Representatives may include leaders of farmers’ cooperatives, unions or private firms. Effective representation is also a prerequisite for encouraging smallholder farmers and other producers to enter into partnerships with private sector firms in Ethiopia.
To penetrate new markets, an Associations of Ethiopian Exporters forges joint action in that direction. Strong sector organizations with legitimate representatives and competent management are therefore vital for achieving well-coordinated value chain development. Coordination is an essential group activity that reduces costs that may accrue from ineffective isolated activities. It is needed for facilitating input supplies such as fertilizers, improved seeds, machineries, capital and finance that are critical for starting production in time. Coordination is also needed for output delivery, arranging for transport facilities in a planned manner at the right time and place.
A number of innovative approaches have been designed to promote gender equity in value chain development. This is illustrated by the upgrading of the honey value chain in which women participated. As pointed out by Mayoux et al the upgrading process started with participatory analysis of gender-specific involvement. The “invisible” women stakeholders confirmed that they are largely excluded from higher-level activities with greater potential for generating increased income, such as input supply, production and trade. The study highlighted the means of creating opportunities for “all” chain actors through: 1) Upgrading and improving of the value chain; 2) Creating higher margins or profits and 3) Contributing to gender equity and increased incomes for women.
Studies show that the role of Ethiopian women in brewing tej, the traditional drink made from honey is of superb quality and could be exported. The provision of technical support to women engaged in more profitable businesses is of the essence. Support to women should focus on removing major constraints to the upgrading of the entire chain, from input or raw material supply to actual production and marketing and exporting of output. Another fundamental driver for change is the adoption of “women friendly” intermediate factors of production, including land and capital to work with. Credit facilities may promote the role of women entrepreneurs. Initially, however, these women may be encouraged to work near or around their household and farms in a synchronized manner.
With experience gained in small businesses, female entrepreneur discover that proper management and high quality products provide better income opportunities. They also become exemplar for other women who would like to start small businesses in their urban/rural settings. The integration of these women in the value chains would improve their efficiency and productivity that would raise their income and prestige in the community.
The role of development agents is crucial in enlightening women in the management and coordination of inputs for production and outputs for the market. It is also crucial to identify women with acumen, intelligence, insight and judgment and business inclination. In Ethiopia, a large majority of women are engaged, apart from household chores, in the informal economy and they need assistance to join the formal sector. To avoid probable failure, it is wise to pick the right woman for the right business and value chain development.
BY GETACHEW MINAS
The Ethiopian Herald 13 June 2021
