value chain concept _EN_ by huanghengdong


									Farm Concern International
   Winning markets for farming communities

    Value chain concepts

      Mumbi Kimathi Mrs.
      Programmes Director
     Market & Chains Analyst
      Farm Concern International

• Mission
  To build Pro-poor market development
  initiatives and commercialization of
  poor households in Sub-Saharan Africa
  for enhanced community

• Vision
  Commercialized African households
  with increased incomes and better
         Value chains
• The value chain approach, is a
  concept that links raw materials,
  components and manufactured
  goods and further highlight the
  various transaction levels as good
  & services are moved to final
• Value chains are highly dynamic,
  ordinarily with several value
  addition levels.
 Market Destinations and Value
      Chains as a means
• Nature of destination markets highly
  dictate value chains systems
  developed by market players. Value
  chains only enhance entry to markets.
  Key market segments;
  – Consumer markets
  – Business markets
  – Reseller market
  – Governments & Institutional markets
  – International markets
     Market environment
• Traditional or formalized marketplace
  determines who are the Value chain
  players & systems
• Africa is characterized by traditional
  – Kenya’s horticulture sub-sector;
     Market shares [ Based on Volume]
     • 92 % Domestic market
     • 8% International markets [ 6% cut flowers &
       2% fruits & vegetables]
     • Domestic market shares: 18% Supermarkets
       & Groceries and 82% Traditional markets
Value chain discrimination
                •   Commercial BDS systems established
                •   Relatively high investment levels
                •   Medium / large-scale farmers
                •   Low poverty index
                •   High private sector investments
                •   Cash economy
                •   Active regional and global value chains
                •   Well established business partnerships

                                                       Poverty line

         •   Minimally identified value chains and BDS systems
         •   Under- developed marketing infrastructure
         •   Minimal economic activities
         •   Large parcels of land characterised by low productivity
         •   Mixed food and cash economy
         •   Semi – commercial production systems
                          Typical value chains
Farm gate
sales                                                         Financial
              Village-based                                  •Credit Co.
                                                           •Insurance Co.

                          Level 2 Brokerage


                          Business markets
        Market            e.g. Processors                    Consumer markets
                                                             e.g. traditional fresh
 • Physical Dist. Firms
 •Market service firms                                       produce markets
      • Resellers

  Specialized                      Govt. & Institutional
  consumer markets                 market
Emerging threats in Sub-Saharan
• Weak production systems that will eventually
  fail to support food chains in both rural and
  urban areas
• Increased urbanization in Sub-Saharan
• Africa demands stable rural production
  systems to support emerging food demands
  for priority products e.g. roots & tubers,
  cereals, legumes, horticultural products etc.
• Food prices would increase as result of
  weak food chains thus increased cost of
   living….and more slums in SSA
        Benefits Analysis:
    •    benefits sought by the medium processors
         – quality, consistency and competitive prices.

    •     large scale processors often supply them with
         lower grade nuts with fluctuating prices.

    •    With increased efficiency and economies of scale
         the cottage processors can supply top grade nuts
         at competitive stable prices of Ksh. 400 per kilo.

    •    medium processors outsource nuts as semi-
         processed from large processors

    •    quality assurance system needs to be installed in
         the cottage processing industry.

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