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Equitable Value-Chain

Approach forSmall Farmers in

Selected Agri-Commodities:The PRIME program(2005-2010)

EEquitablequitable VValuealue--CChainhain

AApproachpproach

forforSSmallmall FFarmers inarmers in

SSelectedelected AAgrigri--CCommodities:ommodities:The PRIME programThe PRIME program (2005(2005--2010)2010)

Promoting Rural Industries & Market Enhancement Program

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1. Agriculture for Development

(AFD) & SustainableEconomic Growth (SEG)

2. Stages of development ofrural communities & PRIMEsvalue-chain approach

3. Lessons Learned

Outline of Presentation

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Agriculture as engine of

growth for povertyreduction

In WDR 2008, World Bank isadvocating a new agriculture foragriculture fordevelopmentdevelopment(AFD) framework(AFD) frameworkwhich proposes to employagriculture as engine ofengine ofdevelopmentdevelopmentespecially for therural areas

According to the WDR, for thepoorestpoorest people, GDP growthoriginating in agriculture isabout four times more

effectivein reducing povertythan GDP growth originatingoutside the sector

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AFD equals

New Agriculture The thrust of AFD is to advance

New AgricultureNew Agricultureaccording to the

WDR 2008

New agricultureis market driven,state assisted, civil society

influenced, environment/gendersensitive & grounded intechnological and institutionalinnovations

It is led by private entrepreneurs inextended supply chains linkingproducer to consumers, including

entrepreneurial smallholders &small rural non-farm entrepreneurs

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Pathways out of Poverty equals

Pathways to New Agriculture Smallholder competitiveness: Increasing competitiveness of small farmers

thru better technology, risk mgt, lowering market transactions

Smallholder market entry: Inducing shifts from subsistence to market oriented

farming where key policy instruments is increased access to asset (land, human capital& social capital) & investment in infrastructure

Subsistence livelihoods: Improving conditions for poorest segments of ruralpopulation engaged in subsistence farming & low skill jobs by raising productivity oflabor & social assistance (e.g. conditional cash transfers; poverty alleviation fund, etc.)

Skilled occupations: Enhancing or upgrading skills for migrationto higherskilled jobs in rural farm & non-enterprises and urban employment (in the Philippinesthis might even mean migration to foreign job markets)

Environmental Stewardship: Upgrading stewardship skills smallholders &farm labor in enhancing the role of agriculture as provider of environmental services:e.g. carbon sequestration, rational water mgt, minimizing chemical pollution & soilexhaustion

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CIDAs Sustainable economicgrowth (SEG) means

Accessible, open and effective markets. entrepreneursand the poor can enter and participate substantially as major player

Sound business fundamentals. adequate investment ininfrastructure and public goods

Capable human capital. adequate public health, education &training, with capacity to innovate and unleash the power ofentrepreneurship.

Availability of equal opportunity. social & economicenvironment upholds equality of opportunity for women and men; equalaccess to essential public services like health, education, etc.

Sound environmental stewardship. guiding policies &principles in the use of limited natural resources

Responsive, accountable government (national &local). govt. institutions with effective & transparent public

management; creates macroeconomic stability; attractive policyenvironment for savings and investments

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Imperatives forsustainable economicgrowth in agriculture

Investing in people: Demanddriven skills development; essentialskills and knowledge

Growing business:MSME

support services; innovation &productivity; financial servicesdevelopment

Building economicfoundations: e.g., favorablepolicy environment on financing, infra-structure, sustainable mgt of natural

resources & environment; fiscalincentives for PPPs, etc.

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AFD & SEG affirming

PDAPs PRIME PRIME was designed in 2004 and

implemented in 2005 as the CSOs

response to the challenge of smallholder agriculture development,linking small farmers to marketsthrough agri-business and ruralindustry development

WDRs AFD was published in 2008and CIDAs SEG started to bedrafted in 2009

Winding down its implementation inthe last few months till Dec. 2010,on hindsight PRIMEs workseemed to be affirmed by the AFD

and SEG frameworks

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Stages of Development of Rural Communities

SURVIVAL PRODUCTIVITY GROWTH

INDUSTRY-ORIENTEDENTERPRISE

MICRO-ENTERPRISE

DEVELOPMENT

SUSTAINABLEAGRICULTUREAND CROPDIVERSIFICATION

AGRICULTURALPRODUCTIVITY

LAND TENUREIMPROVEMENT

AGRARIAN

REFORMADVOCACY &MOBILIZATION

AGRARIAN(COMMUNITY-FOCUSED)

AGRO-INDUSTRIAL

(SECTORAL)

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Supply/Value Chain as Vehicle for

Equitable Development Impact Supply Chainrefers to the entire vertical chain of

activities: from production on the farm, through

processing, distribution, and retailing to the consumer - inother words, the entire spectrum, from gate to plate,regardless of how it is organized or how it functions

Value Chainrefers to a vertical alliance or strategicnetwork between a number of interdependent businessorganizations within a supply chain

F Diff i i

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Factors DifferentiatingSupply Chain vs. Value Chain

Factors SupplyChain

ValueChain

Informationflow

Little or none Extensive

Principal focus Cost/Price Value/Quality

Strategy Basic Product DifferentiatedProduct

Orientation Led by Supply Led by Demand

OrganizationalStructure

IndependentActors

InterdependentActors

Philosophy Competitiveness

of the enterprise

Competitiveness

of the valuechain

Hobbs et al., Value Chains in the Agrifood Sector: What are they? How do they work?

S C

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Coop/Assn.

LMC

DISTRIBUTOR

11 BDS (NGOs) Capacity bldg fortechnology,organizational &enterprise devt

5 FIs/CPs Financing fortrading, equipment,working capital;

production

ENSURE

EQUITABLE

DIST

RIBU

TION

OFINDU

STRY/E

NTER

PRISE

GAINS

&BEN

EFITS

CONSUMERS

NGAs, LGUs, Academe, NGOs,

Donors, Private Sector Policy support; Information;Technology; Communication

PDAP-PRIME Supply/Value Chain &Stakeholders

PDAPPDAP--PRIME Supply/Value Chain &PRIME Supply/Value Chain &

StakeholdersStakeholders

FarmersFarmersFarmers

2 Industry Associations

(Commodity-based) +

1 Marketing Corporation

2 Industry Associations2 Industry Associations

(Commodity(Commodity--based) +based) +

1 Marketing Corporation1 Marketing Corporation

TradesTradesTrades

TradesTradesTrades

TradesTradesTrades

SellsSellsSells

42 Partners in3 Commodities:

Organic Rice

Muscovado Sugar

Seaweeds

42 Partners in42 Partners in3 Commodities3 Commodities::

Organic RiceOrganic Rice

MuscovadoMuscovado SugarSugar

SeaweedsSeaweeds

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Access to markets require capacitybuilding. Markets can work for the poorfarmers/fisherfolks but capacity developmentintervention takes time especially for rural

communities in stages 2, 3 & 4; softwareinvestments are as important as hardwareinvestments; viable collective MSMEs key tomarket access

Appropriate BDS & agri-extension.Financial products/services and generic BDSservices are mostly available for stages 5 & 6 but

not for stages 2, 3 & 4; need to fashion outappropriate financial products and BDS/agri-extension services (e.g., rationalizing/streamlininggovt agri-finance policies & institutions; DA-LGU-

CSO-Academe-Private Sector collaboration inBDS & agri-extension, etc.)

Lessons learned

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Strengthening local governance. nationalpolicies are important but major challenge in localization &operationalization; key element to localization isstrengthening local institutions, multi-stakeholderprocesses directed at strengthening local governance

Systems approach & institutionalcollaboration. agriculture development requires

more than just farm technology; fragmentation of servicesdo not help at all; need for a package approachcombining markets, technology, finance/credit, infra,policy reforms; institutional collaboration.

Sustainable agriculture &diversification. SA combined with agri & non-agriincome diversification will help mitigate and managevulnerabilities and risks of the rural poor, will helpincrease income of the poor, and as adaptation strategy

for climate change

Lessons learned

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Productivity improvement not enough for povertyreduction. Increasing productivity for small holder agriculture is key tofood security but will not be sufficient for poverty reduction; value-addingand an agri-business approach with government-private sector

investments in infrastructure, post-harvest/processing, access to markets,etc. are necessary

Sustainable livelihoods for rural households. Households arethe foundational economic unit for viable agri-MSMEs; developmentinterventions be directed towards management of risks & vulnerabilities offarming HHs; GE/GAD approach in improving household incomes, e.g.,technology & credit options for men and women

Lessons learned

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A final word

It would be unthinkable

to consider peace,characterized simply byworldwide absence of

conflict when millions ofpeople die yearly fromstarvation, disease and

poverty.

-Bahai International statement during the UNInternational Peace Seminar, Bangkok 1985

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DaghangDaghangsalamatsalamatsasa

pagpaminawpagpaminaw!!

Thank you forThank you for

listening!listening!

From the PDAP family