Benefit of value chain management in Agriculture

A 'value chain' in agriculture identifies the set of actors and activities that bring a basic
agricultural product from production in the field to final consumption, where at each
stage value is added to the product..

Agricultural markets are rapidly globalizing, generating new consumption patterns and new production
and distribution systems. Value chains, often controlled by multinational or national firms and
supermarkets, are capturing a growing share of the agri-food systems in developing regions.

High Value chains

Over the past decades, there has been an increment of projects designed to adopted value chains
strategies that are capable to tackle poverty, increased incomes, productivity, guarantee food security,
involve marginal groups and reduce environmental impacts. The value chain approach originally was
established as a business tool to obtain more efficient and competitive results along the enterprise
influence, but international development agencies and non-government organizations instrumentalised
this approach in order to achieve development objectives.

Accordingly, to Kaplinsky (2000) A value chain “represents the full range of activities and services
required to bring a product or service through the different phases of production and delivery, to the
final consumer”. The term value chain also refers to the importance that value is added to products
across one link to the next one in the chain through the combination of knowledge and resources (ILO
2006). From the organizational and institutional view, a value chain can be analyzed as the formal and
informal arrangements that allow coordination and collaboration links across actors and at different
points along the chain (Kaplinsky 2004).

Normally, the value chain interventions also incorporate an inclusive or pro-poor approach for its ability
to “link farms and firms in remote regions to growing and emerging market opportunities (Riisgaard et
al. 2010). This approach is based on the logic that “market liberalization and economic development
represent necessary but not sufficient conditions for poverty reduction and that poor people need
support so that they can participate in this value chain and derive a benefit from it in a way that creates
growing prosperity in their (poor) communities and promotes equitable economic growth.”
The agricultural value chain (AVC) is an evolving concept across the globe as economies worldwide
tackle emergencies like the COVID-19 pandemic and threats of food insecurity and malnutrition. In light
of the same, sustainability has found a unique platform as a tool to drive long-term benefits that do not
hamper human and natural resources. The value added by AVCs can be measured by different
parameters such as renumeration, return on assets, food security and net impact on the environment.
Considering the different stakeholders involved in AVCs, it becomes important to assess the value
generated for all of them. There are multiple challenges that currently prevent equality and equity in
AVCs, such as limited access to resources, unsustainable agricultural practices, threats to biodiversity
and lack of knowledge.

Agri supply chains in developing countries Agricultural supply chains in developing countries are highly
complex. They comprise interacting networks linking multiple players such as producers, farm workers,
input providers, processors, logistics service providers, wholesale and retail shops, industries,
governments and other organisations. These supply chains impact both the present and future growth
of countries. Over the years, developing nations have strengthened their presence in agri supply chains
by driving global exports. The figure below depicts the increasing global share of agro-based exports
from developing countries (including China’s). In 2019, these exports accounted for 35% of global
exports.

The importance of AVCs in a country like India can be further understood by assessing the numbers
carefully. The agriculture sector contributes 18.3% to India’s gross domestic product (GDP)7 and
employs 42.6% of the country’s population.8 The Indian agri supply chain involves close to 150 million
farmers and revolves around institutions, resources, service chain and service delivery, and technology
mechanisms. These four components include stakeholders, ranging from Government authorities to
farm workers who are responsible for agricultural production, speedy transportation of produce,
certification and sales. This ecosystem is undergoing transformation over time, hence making same-day
packaging and delivery of supplies possible. Various efficient digital platforms have enabled this
transformation by connecting stakeholders across the value chain. For example, the Kisan Rath app
launched by the Government of India (GoI) has connected various value-chain stakeholders, 500,000
trucks and 20,000 tractors through transport aggregators.9 The Aajeevika Farm Fresh app launched by
the Jharkhand State Livelihood Promotion Society is helping farmers to sell fruits and vegetables. In
Maharashtra, various self-help groups (SHGs) are connecting with end consumers using a cross-platform
messaging app. Across India, various farmer producer companies (FPCs) are producing, marketing and
selling produce through the support of their member farmers
 APMCs, contract farming, etc.PDS, ration shops, cooperatives, SHGs and FPOs
Quality control, certification and hygiene waste management
Citizen groups

Cold chains, logistics and transportation Canal, roads, water and power
Institutions
Research and development, and laboratory testing
Service delivery,
technology and
mechanism

Warehouse and packaging

Resources
Agri supply chain ecosystem Sourcing hubs and clusters
Food parks, APEDA and freight corridors ecosystem
Banks, microfinance and cooperative societies
Service chain

Seeds, fertilisers and pesticides

Suppliers – farmers, meat, fisheries
Foodand dairy Packaging and distribution
processing Retail, restaurants and markets