Value Chain Strategies for Reducing Poverty
25 % of the world's food is wasted.
Billboard at the Washington Reagan
National Airport
Billboard at the Washington Reagan
National Airport
· Create new uses for a product. The US ethanol subsidy has been extremely successful at creating a new market for corn and thereby raising the cost of staple foods for both rich and poor alike. This year we are hoping to investigate the possibility of using a fed poultry industry to pull smallholder grain producers into a more remunerative value chain, thereby reducing poverty.
· Exploit a niche that pays a premium for quality markets. There are millions of unfilled ‘niches’ in the world, largely because most of them don’t pay a premium to the smallholder for the effort and expense it takes to make the niche product. However, finding the right niche can be extremely effective at reducing poverty, as shown by the Rwanda coffee example.
· Diversify into non-agricultural value chains. Micro-finance for women’s groups has been used to finance a variety of agricultural and non-agricultural production and sales activities, and often has increased women’s incomes.
· Introduce a new product. Many horticultural projects introduce a number of fruits and vegetables to cropping systems. In Kenya the introduction of vanilla, paprika, passion fruit, and other horticultural crops has made a quantifiable difference in smallholder income and poverty. It is harder to introduce a ‘new’ staple crop, although the introduction of improved varieties of staples that perform well in dry conditions might be one example of success. Malawi, for example, reports success with improved cassava varieties.
· Expand commodity markets, especially for staple foods, coupled with rapid increases in physical productivity. The idea is that by linking smallholders both to the inputs needed to come close to full yield potential and to expanded markets that can handle the increased production, smallholders can transition from subsistence farming to semi-subsistence or even commercial farming.
· Expand the concept of staple foods. Think about the major fruits and vegetables playing a bigger role in the diet, thereby becoming staple foods as well as improving nutritional adequacy.
· Wring costs out of the value chain. This is the classic value chain six-sigma type analysis, and what has made WalMart and Tesco into world leading food retailers. Wringing costs out of the value chain has more benefit for the urban poor by reducing food prices, for example as seen in the MSU analysis of Kenyan and Zambian grain markets.
· Exploit a niche that pays a premium for quality markets. There are millions of unfilled ‘niches’ in the world, largely because most of them don’t pay a premium to the smallholder for the effort and expense it takes to make the niche product. However, finding the right niche can be extremely effective at reducing poverty, as shown by the Rwanda coffee example.
· Diversify into non-agricultural value chains. Micro-finance for women’s groups has been used to finance a variety of agricultural and non-agricultural production and sales activities, and often has increased women’s incomes.
· Introduce a new product. Many horticultural projects introduce a number of fruits and vegetables to cropping systems. In Kenya the introduction of vanilla, paprika, passion fruit, and other horticultural crops has made a quantifiable difference in smallholder income and poverty. It is harder to introduce a ‘new’ staple crop, although the introduction of improved varieties of staples that perform well in dry conditions might be one example of success. Malawi, for example, reports success with improved cassava varieties.
· Expand commodity markets, especially for staple foods, coupled with rapid increases in physical productivity. The idea is that by linking smallholders both to the inputs needed to come close to full yield potential and to expanded markets that can handle the increased production, smallholders can transition from subsistence farming to semi-subsistence or even commercial farming.
· Expand the concept of staple foods. Think about the major fruits and vegetables playing a bigger role in the diet, thereby becoming staple foods as well as improving nutritional adequacy.
· Wring costs out of the value chain. This is the classic value chain six-sigma type analysis, and what has made WalMart and Tesco into world leading food retailers. Wringing costs out of the value chain has more benefit for the urban poor by reducing food prices, for example as seen in the MSU analysis of Kenyan and Zambian grain markets.