Promoting Agricultural Value Chains:
In the OIC Member Countries
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At each point in the chain, exchange between chain actors involves at least the product itself
(from upstream parts of the chain to downstream parts) and money (from downstream parts
to upstream parts). The “upstream” part of a chain here refers to the production or extraction
of raw materials, whereas the “downstream” part involves the processing and/or
manufacturing of a finished product and the actual sale of the product to consumers.
In addition, value chain actors may invest in the relationships to each other to ensure the
functioning of the chain. Such investments may take the form of loans (e.g. from trader to
farmer), fees (e.g. from farmer to a farmers’ cooperative) or funds for new projects (e.g. a new
processing plant). Each of the actors may operate a highly different levels of investment, from
investments of only a few dollars to several million dollars (African Development Bank, 2013).
Value chain actors may also share information with each other so as to enhance the
performance of the chain, including information on varieties, quality, quantity or delivery
times of products. This gives rise to multiple flows in agricultural value chains which run in
parallel (see Figure 1-1).
Figure 1-1 A simple value chain
Trader Farmer Processor Wholesaler Retailer Consumer
$ $ $ $ $
Product
Money
Services,
information
$
Source: adapted from KIT & IIRR, 2010
Chain supporters may provide various services to the chain actors, such as financial services,
including loans, insurance, accounting and savings services, as well as a wide array of non-
financial services, which encompass input supplies, farm labour, transport, grading,
processing, storage, packaging, advertising, research, training, advice, organisational
strengthening, and so on (KIT & IIRR, 2010). Many of these services are provided by a fee;
others are offered for free (or rather through indirect levies and tax payments), such as
government extension and research services.
The chain context includes the larger economy, currency exchange rates, government
economic policy and governance, tax, regulatory and legal frameworks, influence by advocacy
movements and by social structures. This context may help the performance of the chain, for
example through targeted policies that support business or it may act as a constraint by
imposing restrictions and barriers to trade (KIT & IIRR, 2010).
The relationships between value chain actors, supports and context can be visualised as
follows (see Figure 1-2).