Promoting Agricultural Value Chains
In the OIC Member Countries
15
origin-based labelling also fall under this category. Certification is often required to
demonstrate compliance with such intrinsic value standards.
In agricultural value chains, setting and enforcing standards have become both a public
and private issue. While historically, standards and food grades were viewed as public
domain issues necessary to address imperfect information leading to market failure,
contemporary agricultural value chains are increasing characterised by the proliferation of
private standards, such as food safety and quality requirements (Henson & Reardon,
2005). Indeed one of the main drivers of value chain development in recent years has
come from the introduction and rapid spread of private standards and the demands for
compliance by large, often multinational buyers. Private standards can be collective
business standards, individual company standards, multi-stakeholder standards or
standards driven by non-governmental organisations.
The rise of private standards has triggered an intense debate in the literature concerning
the consequences of this development for developing country producers. While large
producers have generally been able to meet the requirements of increasing standards with
relative ease, certification has proven to be much more difficult for small-scale farmers due
to the demanding requirements and the high costs of compliance in the face of lacking
resources and a variety of institutional and technical constraints. Although there are
reported cases where small-scale growers have been able to comply with standards and
participate in such chains, inclusion or exclusion from agricultural value chains in the
context of standards greatly hinges on the provision of extensive external support to such
farmers.
(3) Infrastructure and logistics . In many countries, infrastructural and logistical challenges
remain critical barriers for inclusive chain development. Particularly in rural areas – the
place of origin of most agricultural products – infrastructure is often in a poor state and
moving agricultural goods from production to markets is often expensive and time-
consuming. For instance, electricity infrastructure in sub-Saharan Africa is the least
developed, least accessible, least reliable, most costly to operate and highest priced of any
region in the world, putting African producers and processors at an immediate competitive
disadvantage as regards electricity costs (United States International Trade Commission,
2009). Weak storage, distribution and cooling facilities further add to the costs of
agricultural trade and lead to high spoilage rates due to the time-sensitivity of certain
inputs and the perishable nature of many agricultural goods (Global Harvest Initiative,
2013).
A range of studies therefore show the positive effects of infrastructural development on
agricultural production and trade. For instance, it has been found that a 10 percent
improvement in transport and trade-related infrastructure has the potential to increase
developing country agricultural exports by 30 percent (Moise et al., 2013). Better access to
markets also reduces the impact of price shocks and provides opportunities for new
agricultural and non-agricultural activities (Jouanjean, 2013).
In addition to such “hard infrastructure”, “soft infrastructure” is recognised as key to the
development of agricultural value chains. This includes administrative procedures, trade
processing at border crossings or ports, access to information technology and value chain
finance. Particularly the latter is often a major concern in many developing countries