Smallholders offering their potatoes in Eldoret, Kenya.
Photo: F. Hartwich


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Value chains can be an opportunity to link smallholder farmers in developing countries to lucrative markets for consumer goods worldwide. However, they are not a sure-fire success. This article provides an overview of the conditions under which smallholder engagement in value chains makes sense and what is necessary to make them a successful tool for development.

Agricultural value chains are organisational schemes that enable a primary product to get sold and transformed into consumable end-products, adding value at each step of a gradual process of transformation and marketing. It is not only recently that the value chain concept has been entering the development debate. Already in the 1990s, supply chain and logistics management scholars as well as the school of global value chains (GVC) found that value chains play an important role in development. From different angles, these scholars looked into how developing country suppliers link to markets in the more developed world.
Recently value chains have experienced renewed interest: Development agencies as well as private companies are using them as vehicles for smallholder engagement. This new agenda is driven by the following assumptions:

  • Smallholder production can easily be absorbed by national and global value chains.
  • Engaging smallholders brings income and employment benefits to smallholders.
  • Smallholders have the capacities and resources required to produce in response to the requirements of value chain players, or at least they can acquire them with reasonable effort and time.
  • Important value chain players, such as international buyers, would be keen on supporting the engagement of smallholders.

However, there is evidence that not all that glitters is gold in value chain development engaging smallholders.

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