Promoting Agricultural Value Chains
In the OIC Member Countries
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2. Global trends and success stories in agricultural value chains
2.1 Trends in promoting agricultural value chains
2.1.1 Agro-food systems in a changing world
In times of accelerated levels of globalisation and liberalised trade, agricultural value chains
and markets are rapidly changing and becoming increasingly complex. Several factors
contribute to this changing context, including a growing world population, shifts in
consumption patterns and consumer demands, advances in technology, and changing
governance structures along chains. In addition to basic agricultural commodities, global
demand is increasingly multi-faceted, ranging from growing markets for high-value fresh foods
and processed foods to large-scale increases in agricultural biofuel production. Markets are
also changing geographically. Not so long ago, production of many agricultural commodities
took place in developing countries destined for export markets in Europe and the US. With
growing purchasing power of emerging economies, especially in Asia, linked to rising incomes
and an expanding middle class, much of the momentum for consumer growth lies in these new
markets rather than in traditional export destinations.
These trends create new opportunities for remunerative involvement by farmers and
agribusinesses around the world. As economies become increasingly intertwined, inclusion in
value chains holds great potential for increased income generation, diversification of
livelihoods, employment creation and value adding activities in developing countries and
emerging economies, all of which are positive for economic growth and poverty reduction.
At the same time, participating in global value chains has become increasingly difficult, as
heightened levels of quality demands and sophistication of products pose major challenges for
many producers and agribusinesses. Most notably smallholder producers, yet also small-scale
processors and small retail shops find themselves increasingly excluded from agricultural
value chains or are progressively marginalised into less lucrative positions. High transaction
costs, resource and institutional constraints as well as logistical bottlenecks have long been
recognised as key impediments to successful participation by small market players, but are
now being amplified by a new set of challenges related to the various changes in the
production, trade and consumption of agricultural products.
Against this background, agricultural value chains are strikingly present in national and
international strategies seeking to promote economic growth and poverty alleviation. In many
developing countries and emerging economies, agriculture remains the backbone of the
national economy and is of paramount importance both as a component of GDP and source of
employment. This emphasises the importance of agriculturally-driven growth, which is
considered to be particularly “pro-poor”, as many of the world’s farmers are millions of small-
scale producers and labourers whose livelihoods are highly vulnerable and depend on
agricultural production. Agricultural growth can also have significant positive spin-offs for
non-agricultural sectors due to forward and backward linkages and expanding consumption
that comes with rising agricultural income.
Close connections of agricultural growth to food security and hunger are equally pronounced.
In 2012-2014 about 805 million people in the world, or one in nine, suffered from chronic
undernourishment (FAO et al., 2014). While necessary for combating poverty and hunger, food