Summary of Comments On Integrating Poverty and Environmental Concerns Into Value Chain Analysis - A Conceptual Framework

Summary of Comments on Integrating Poverty and
Environmental Concerns into Value‐Chain Analysis: A

Conceptual Framework
Type: Highlight
Page: 1Author: marcelacely Subject: HighlightDate: 3/13/23, 14:05:24 2010
Page: 1 Author: marcelacely Subject: Highlight Date: 3/13/23, 14:05:19

value chain restructuring is in turn mediated by local
history, social relations and environmental factors
examining the typologies and locations of chain actors, the linkages between them, and
the dynamics of inclusion and exclusion. It also entails understanding the structure of
rewards, the functional division of labour along a chain and its changing shape, the
distribution of value-added and the role of standards in facilitating or hindering
participation.
Little attention has been paid to how participation in
value chains exposes poor people to risks, as opposed to how it affects income
opportunities.
a tendency to address upgrading and inclusion as
‘management’ and ‘competence’ problems. This downplays the often highly
asymmetrical power relations in agro-food value chains and the fact that the terms of
participation are to a large extent controlled by ‘downstream’ (near the point of
consumption) actors such as importers and retailers. This in turn suggests that
upgrading and inclusion for small producers require interventions at sites located beyond
their areas of operation, often drawing on external resources and networks.
flows of material resources,
finance, knowledge and information between buyers and suppliers (where ‘upstream’
signals flows towards production, and ‘downstream’ towards consumption).
A value chain can have different
strands, due to different product characteristics, for example specialty coffee
Governance is the process by which so-called ‘lead firms’ (see below) organise
activities with the purpose of achieving a certain functional division of labour along
a value chain – resulting in specific allocations of resources and distributions of
gains.
setting the terms of chain membership, the related incorporation/exclusion of
other actors, and the reallocation of value-adding activities
external actors can have an
important say in how a GVC is governed, particularly government agencies, large
NGOs, ‘experts’, certification bodies and service providers
efforts to refine definitions of governance in GVCs in
terms of how certain actors set, measure and enforce the ‘parameters under which others
in the chain operate’
governance in this
article refers to the process of exercising control along the chain through the
specification of what type of product needs to be supplied, by whom, in what quantity
and when, how it should be produced, and at what price.
(i) market (spot or repeated market-type inter-firm transactions where price is the
dominant co-ordination mechanism), (ii) hierarchy (vertical integration – an actor
performs several functions), and (iii) different kinds of contractualisation (between
‘market’ and ‘hierarchy’, denoting longer-term and more complex relationships,
as distinct from market transactions
possibilities for
producers to ‘move up the value chain’, either by shifting to more rewarding functional
positions, or by making products with more value-added invested in them, and/or
providing better returns
through the lenses of how
knowledge and information flow within value chains (Gereffi, 1999). Upgrading is
about acquiring capabilities and accessing new market segments through participation in
particular chains.
(i) process upgrading: achieving more efficient production by reorganisation;
(ii) product upgrading: moving into products with increased unit value; (iii) functional
upgrading: increasing skill content; (iv) inter-chain upgrading: applying
competences acquired in one function to a different sector/chain.
co-ordination as ‘effort or measures designed to make players within a market system act in a
common or complementary way or toward a common goal.
delivering larger volumes (even of lower quality), matching standards and certifications,
delivering on logistics and lead times, getting better paid for the same product (for
example, fair trade)
‘functional downgrading’, combined with economies of scale, can also be
successfully employed to maximise returns or to remain in an increasingly demanding
value chain.
Page: 5Author: marcelacely Subject: HighlightDate: 3/13/23, 14:26:58 change in value-chain participation for small producers

a desirable change in participation that increases rewards and/or
reduces exposure to risk – where rewards and risks are understood both in financial
terms and with regard to outcomes related to poverty, gender and the environment
Standards are important for developing-country farms and firms
because they determine access to specific segments of the market (for example, in
defining forestry products that are ‘sustainable’), to specific countries (for example,
through regulation on food safety and technical requirements) and the terms of
participation in global chains (for example, through matching quality standards).
standards set entry barriers for new entrants, and present new challenges to
existing suppliers
the challenge of rising standards provides the
opportunity for selected suppliers to add value, assimilate new functions, improve their
products, and even spur enhanced forms of co-operation among actors in a specific
industry or country (Jaffee, 2003)
it is important that the integration of
poverty, gender and environmental aspects into value-chain analysis includes
knowledge of the demands and expectations that compliance with different kinds of
standards entails, and an assessment of specific costs and benefits – not only of a
financial, organisational or investment nature, but also in terms of vulnerability, risk and
inequality.
link, for example,
household- and intrahousehold-level micro-analyses with accounts of global and
national processes (Murray, 2002)
Attention has to be paid both
to the vertical links – the value chains that link local livelihoods upstream and
downstream to distant networks of production and exchange (Kaplinsky, 2000; du Toit,
2002) – and to the horizontal ones – the ways in which the impact and nature of
integration into globalised systems are locally mediated (Goodman and Watts, 1994).
analysis not only of the power relations that exist within the chain
itself, but also of power and inequality in the local systems and relationships within
which chain actors and their communities are situated (du Toit, 2004b).
poverty should be analysed in terms not only of exclusion (from value
chains, for example) but also of the (pre-)conditions and terms of participation
People may be
thoroughly incorporated in a particular value chain, but highly marginalised or excluded
in another sense
Even if people are
included, this may not be on advantageous terms, and analysis should look carefully at
the costs and benefits of participation in a particular chain.
When people lack leverage within a
particular economic or social field, retreat to the margins or externality from its
operations may be an advantage (du Toit, 2008). Small farmers opting out of production
for a global value chain, and choosing instead to produce for less lucrative but less risky
local markets, are in one sense becoming more marginal but may experience relatively
more market leverage (Tapela, 2008).
increase rural
inequalities since it is typically only the better-off smallholders who are recruited to
them (Key and Runsten, 1999).
Page: 6Author: marcelacely Subject: HighlightDate: 3/13/23, 14:36:00 Bolwig et al., 2009).
‘poverty’ itself is a political and moral, not an
analytical, term.
Livelihoods. Value-chain studies tend to focus on the incomes and assets
associated with the relevant chain, while other sources of wealth get less
attention.
households participate in multiple value
chains. This involves the possibility that income earned in one value chain may be
invested in another chain, but also that different chains compete for the same household
resources.
the nature of a household’s
participation in a given value chain depends not only on its resource endowments and
the returns and risks from participation, but also on how it affects overall household
resource allocation, income, risk and benefit distribution.
The most prominent of these, of course, is cash
income, but this is only one of the kinds of resource
Non-monetary kinds of income are important, as are other kinds of resources
or
assets (land, labour, skills, capital, etc.) that can be central to the generation of value.
consider
whether the impacts are increasing or decreasing income and resources
what Sen famously
called the human ‘capabilities’ to achieve various ‘beings and doings’ or ‘functionings
Page: 7Author: marcelacely Subject: HighlightDate: 3/13/23, 14:53:25 researchers can get a more
direct understanding of the poverty and wellbeing impacts by noting the extent to which
want or material lack undermines the ability of the people concerned to actually
achieve adequate nutrition, health, shelter, clothing, education and so on (for example,
Klasen, 2000).
Page: 8Author: marcelacely Subject: HighlightDate: 3/13/23, 14:53:44 Chronic, persistent and structural poverty.

A concern with persistent
poverty is often linked to a concern with ‘intergenerational transmission’ of poverty –
i.e. the extent to which the conditions created in poor households harm the life chances
of subsequent generations (ibid; Moore, 2001).
analyses of ‘structural’ poverty
are concerned with the links between persistent poverty and the ways in which
individuals and households are inserted in society.
Vulnerable systems, in common parlance, are at a ‘tipping point’ where a shock
could cause a change of state that is hard to recover from (Ellis, 2003). More
specifically, vulnerability is a function of two other properties – resilience and
sensitivit
If farmers are growing a crop which is primarily geared towards export, for
instance, or dependent on imported inputs, their livelihood systems will be
very
sensitive to exchange-rate fluctuations, whereas those farmers producing for local
markets will not be sensitive in that way
Page: 8Author: marcelacely Subject: HighlightDate: 3/13/23, 14:58:25 if farmers hit by exchange-
rate fluctuations can respond quickly by changing the nature of the inputs on which they
rely, or can easily find resources that allow them to afford more expensive ones
Where a
system is sensitive and not resilient, it is vulnerable; where it is resilient and not
sensitive, it is robust
the extent to which value-chain governance and restructuring lock
participants into reliance on a system that is disproportionately sensitive to shocks, and
what measures might allow recovery

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Summary of Comments on Integrating Poverty and

Environmental Concerns into Value‐Chain Analysis: A

Page: 1 Author: marcelacely Subject: Highlight Date: 3/13/23, 14:05:19

Page: 5 Author: marcelacely Subject: Highlight Date: 3/13/23, 14:27:07

Page: 8 Author: marcelacely Subject: Highlight Date: 3/13/23, 14:53:59

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