Promoting Agricultural Value Chains
In the OIC Member Countries
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have soared and since the mid-1990s, Pakistan is has been a net importer of cotton, despite
being the 4th largest producing country worldwide. This points towards a missed opportunity
to increase value added and develop a high value, integrated cotton and textile chain in
Pakistan.
At the same time, not all value chains in OIC countries comprising smallholder farmers suffer
from an absence of standards, as the case of palm oil from Malaysia showcases. Large parts of
the Malaysian value chain are formalised whereby many smallholders are organised into
larger production schemes. Value chain actors are generally well organised, and the state is
active in infrastructural development and policy support. This has facilitated a significant
amount of producers being members of the standard initiative “Roundtable on Sustainable
Palm Oil” and creates optimistic projections for the promotion and speedy adoption of the new
sustainability standard developed by the (government-owned) Malaysian Palm Oil Board.
6.1.3 Infrastructure and logistics
Many OIC Member Countries have relatively weak infrastructural environments for
agriculture. Problems occur at different levels, including weak research and development,
deficient quality control systems, lack of transport and storage capacities, and inefficient
processing operations.
Infrastructural development seems particularly important with regard to agro-processing for
increased value capture. Currently, many processing facilities in OIC countries need to be
upgraded to improve efficiency, such as in the cotton sector in Pakistan, or operate well under
capacity due to the lack of sufficient produce meeting the quality requirements in order to be
processed, such as with dates in Saudi Arabia or groundnuts in the Gambia.
While this points towards the need for private sector involvement, the business environment
and investment climate in many OIC countries is rather poor. Out of 189 countries that are
compared by the World Bank’s Doing Business Report 2015 on a variety of indicators on
starting a business and protecting investors, the OIC Member Countries score an average of
126 out of 189. The best performing OIC country is Malaysia on place 18 overall, compared to
the worst performing country Libya, ranking 188. The overall poor performance of OIC
countries in this field hampers private sector involvement for infrastructural development in
the agricultural sector.
6.1.4 Governance and value chain actors
Many value chains in OIC Member Countries have a dual character: informal and formal
chains co-exist and often serve different markets. Informal chains are aimed at local processing
and/or local markets; whereas formal chains serve modern processing and market outlets,
including export markets. Dates in Saudi Arabia, milk in Egypt and red meat in Turkey serve as
illustrative examples for such dualistic value chains.
The predominant value chains in terms of the number of actors involved and the quantity of
products produced and traded are often the informal value chains. These informal chains rest
on small-scale, labour-intensive production with low levels of technology and modern
inputs. As such, they are characterised by considerable fragmentation due to the large
number of small-scale farmers in rural areas with unfavourable transport connections and/or
geographical distance to processing and marketing opportunities. In some chains, for example