Promoting Agricultural Value Chains
In the OIC Member Countries
7
Introduction
Background
More than ever, agricultural value chains are at the heart of international and national efforts
to unlock economic growth, promote rural development, and ensure access to food for a
growing world population. As value chains become increasingly global in scope, they are not
only powerful vehicles for coordinating production and consumption, but effectively
determine trade patterns and the integration of countries in the global economy. Across
sectors, production processes at the local level are now closely linked to markets which may be
in other countries and continents, involving a growing number of nonfarm processes before a
product reaches its final destination. Traditional ways of agricultural production, with farmers
producing for unspecified demands and relying on local markets to absorb whatever they
produce, are increasingly being replaced by practices that involve greater coordination along
value chains and higher levels of control by buyers, such as manufacturers and retailers.
As international markets continue expanding and a fast-growing middle class in emerging and
developing economies fuels global consumption, significant opportunities arise for countries to
use their agricultural sectors and gain better control over production, trade and distribution.
Policy efforts have therefore more and more looked beyond issues of agricultural productivity
and focused on the structural connective tissue linking farmers with processors, retailers and
other value chain actors. The dynamic nature of value chains has drawn attention to several
recent trends, such as quality based rather than price based competition, international product
standards, technological advancements and agricultural innovations, which underpin value
chain competitiveness and determine how producers can position themselves within value
chains.
Staying abreast of development trends is particularly relevant for the 57 Member Countries of
the Organisation of Islamic Cooperation (OIC), where approximately half of the population
lives in rural areas and agriculture is a major source of income and employment. While the
total share of agriculture in national GDP in OIC countries has declined from 16.3 percent in
1990 to 10.3 percent in 2012, agriculture is still considered an important economic activity
and provides employment for nearly 35 percent of the total OIC population (Alpay, 2014).
Raising the contribution of agriculture to development by means of value chain promotion is
therefore an opportunity recognised and emphasised by the OIC’s Standing Committee for
Economic and Commercial Cooperation (COMCEC) Agriculture Working Group. However, it is
also observed that value chain dynamics pose context-specific challenges and place new
demands on actors in and around the agricultural sector to cope with and compete in changing
environments. Important barriers in this regard comprise the lack of an enabling context
offering institutional and infrastructural support, availability of resources and effective
coordination in value chains.
This analytical study was commissioned by COMCEC in preparation of the 6
th
Meeting of the
COMCEC Agriculture Working Group on 8 October 2015, to deliver an assessment of the
current state of agricultural value chains in OIC Member Countries. Taking a value chain
perspective on agriculture provides a point of reference and reflection on how producers
operate in domestic and international markets within the context of wider dynamics. The
value chain framework takes into account the position of all players in the chain and has
frequently been used to pay particular attention to small-scale producers to promote inclusive