gvA Update

These days in Nigeria and across Africa, people are talking about agricultural value chains. This is a good thing, but we must realize that value chains work best when all the stakeholders cooperate to produce higher-quality products and generate more income for all participants along the chain. Value chain as a model was developed by Michael Porter to describe the process by which businesses receive raw materials and add value through various processes in order to create a finished product to sell to customers. Policy makers across Africa should be interested in looking at methods by which companies and the economy organize their production steps or stages in creating products. Policy makers can provide an enabling environment to identify and increase the efficiency of the chain. The overall goal in all these being to deliver maximum value from stage to stage for the least possible total cost and for creating overall economic competitiveness for the companies and the economy as a whole. Value chains are strictly speaking not supply chains, which refer to logistics, that is, the transport, storage and procedural steps for getting a product from its production site to the consumer. A value chain encompasses the flow of products, knowledge and information, finance, payments, and the social capital needed to organize producers and communities. According to experts in the field, an agricultural value chain might include the development and dissemination of plant and animal genetic material, input supply, farmer organization, farm production, post-harvest handling, processing, provision of technologies of production and handling, grading criteria and facilities, cooling and packing technologies, post-harvest local processing, industrial processing, storage, transport, finance, and feedback from markets. As I discussed with Anita Campion, agriculture in developing countries often is characterized by dual value chains operating in parallel for the same product, one informal or traditional, and the other formal or modern. Small holders are frequently involved in informal chains that deliver products to local middlemen and then to small local stores. And this chain must be protected by policy makers for mass participation in the development which people now call inclusive growth. Formal value chains can deliver the same product, usually in better or more uniform quality, from larger farms or more organized groups of small farmers to more commercial wholesalers and from there to supermarkets or exporters. In all this, the role of access to capital is critical. Policy would therefore give great attention to fighting inflation so that interest rates can be promoting of profitability, especially in agriculture. I am Magnus Kpakol and that's my view.


Posted: Jan 4th, 2017 @ 05:51:39 AM