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Value-chain development for rural poverty reduction: A reality check and a warning

This article draws attention to the link between Value Chain Development and smallholder livelihood strategies that comprise a complex mix of subsistence and market-oriented activities and that are diversified to meet multiple livelihood goals and mitigate risks; and the authors address the related implications for the design and assessment of value-chain interventions. They question some of the underlying assumptions of NGOs, government agencies, and private-sector agents seeking to link smallholders to higher-value markets. This article presents those claims regarding Value Chain Development (VCD) that are backed by clear evidence or broad consensus (“what we know”), followed by a discussion of issues where more evidence and consensus are needed (“what we think we know”). Next, it examines those questions where current knowledge falls short and where innovative action is needed (“what we still need to know and do differently”). It concludes with a call for an asset-based approach to design, implementation, and assessment of VCD and the need for nonmarket interventions to help particularly disenfranchised groups to meet the minimum asset thresholds for their successful participation in VCD. An asset-based approach to the design, implementation, and assessment of VCD is a powerful vehicle to address these challenges and risks. Not only does it provide an appropriate measure of the multiple dimensions of poverty and vulnerability, but it also helps to determine which households and small holder enterprises are ready for VCD, and which require specific preparatory interventions to become value-chain ready. An asset-based approach to VCD comes at a price, however. Related planning, data collection, and analysis are relatively time-consuming, complex, and costly. At the same time, such an approach helps forgo higher expenses to mitigate unintended effects of interventions in value chains. It provides public-sector and civil society organizations with the necessary information to justify the investment of taxpayers’ money, and holds the potential to improve the environmental and social credentials of private-sector companies pursuing base of the pyramid, corporate social responsibility, creating shared value, or similar strategies.


Stoian, Dietmar; Donovan, Jason; Fisk, John; and Muldoon, Michelle F. 2016. Value-chain development for rural poverty reduction: A reality check and a warning. In Innovation for inclusive value-chain development: Successes and challenges. Devaux, André; Torero, Máximo; Donovan, Jason; Horton, Douglas (Eds.). Chapter 2. Pp. 75-92. Washington, D.C.: International Food Policy Research Institute (IFPRI).

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