Promoting Agricultural Value Chains
In the OIC Member Countries
13
Figure 1-2 Value chain: actors, supporters and context
CHAIN
CONTEXT Climate Government Laws &
Regulations Technology Currency
Input
Providers
Financial
Services
Transport
Services
Training &
Extension
CHAIN
SUPPORTERS
Trader Farmer Processor Wholesaler Retailer Consumer
Source: adapted from KIT & IIRR, 2010
1.3 Value chain analysis
The changing nature of international trade has been subject to significant amounts of research
and debate. In particular, the global value chain (GVC) approach has been widely popularised
to explain the social and organisational structure of the global economy and its dynamics. The
level of analysis is the “network of labour and production processes whose end result is a
finished commodity” (Hopkins & Wallerstein, 1986) rather than individual companies, while
the notion of a chain is used as a metaphor to indicate the general sequence of activities
involved in bringing a product from inception to the market, taking into account the multiple
relational and geographical forms and directions between production and consumption.
GVC analysis examines the international expansion and geographical fragmentation of
contemporary value chains and value creation and capture therein (Gereffi & Lee, 2012). This
includes questions as regards the organisation of global value chains, how these chains are
governed and by whom, and how this impacts on the creation and distribution of value across
chain actors. Thereby it “helps us ask questions about the winners and losers in the
globalization process, how and why the gains from globalization are spread, and how the
number of gainers can be increased” (Gereffi et al., 2001).
This framework has been adopted by many of the most important international organisations
concerned with economic development, such as the World Bank, the World Trade Organization
(WTO), the Organization for Economic Cooperation and Development (OECD), the
International Trade Centre (ITC), the International Labour Organization (ILO), and the U.S.
Agency for International Development (USAID).
GVC analysis applies a framework composed of four dimensions to provide a holistic view of
value chains. First, the input-output structure identifies the main activities/segments of the
value chain, such as production, processing, manufacturing and distribution. Value-adding
activities including design, marketing and research also form part of the input-output
structure. Secondly, the geography outlines the spatial configuration of the chains, such as the
dispersion of production and consumption activities. Different chain segments often take place
in different parts of the world owing to differences in countries’ competitive advantages, such