Promoting Agricultural Value Chains:
In the OIC Member Countries
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Constraints for global agricultural value chain development are numerous, ranging from
natural resource constraints, lack of technology and challenges associated with smallholder-
dominated agriculture, to poor infrastructure and logistical barriers, and weak institutional
environments. A low level of intra-regional trade (see also Chapter 3) between OIC countries
also highlights the absence of strong regional integration and economic development.
In many OIC countries, strategic policies at targeted global agricultural value chain
development are largely absent (e.g. Mauritania), only recently adopted (e.g. Bangladesh) or
ineffective due to lacking implementation (e.g. the Gambia and Benin). Drastic changes in
policies over time can also be observed. Senegal, for instance, was characterised by a strong
focus on groundnut production for export from the 1960s until the late 1980s. In the 1990s,
the government sought to diversify agricultural production to ensure food security. This was
confirmed by the “Great Agricultural Push for Food and Abundance” (GOANA) in April 2008
which aimed to stimulate the production of maize, rice, cassava, and other cereals. In 2012, the
new “Plan Senegal Emergent”, however, was launched to place renewed focus on the export of
groundnut and high value agricultural products (e.g. horticulture). This shows the shifts that
policies undergo as new governments come into power, new donor agendas come into play,
and global outlooks for crops and markets change.
4.4 Integrating smallholders into agricultural value chains
The vast majority of producers in OIC Member Countries are smallholder farmers who
cultivate on less than five hectares, who are not part of any organised networks and
associations, and who do not have access to formal value chains. Rather, they trade through
‘informal’ chains and find their own way around the market. Informal chains are characterised
by the prevalence of middlemen and lack of quality standards and control. Most of the
products usually undergo little value adding activities. Market transactions take place based on
individual initiative and are often based on personal or kinship relationships between actors,
or else through once-off contacts. For instance, in Uganda, a bunch of bananas changes hands
five to seven times from farmer until consumer: starting with the farmer who sells to a bicycle
trader, from the bicycle trader to another trader or middlemen, and from there to a market
vendor who ultimately sells to the consumers (Zijlstra, 2015). Formal value chains, on the
other hand, rely on medium or large-scale production, and are governed by higher degrees of
vertical integration, formal contracts, and heightened quality demands.
While the dominance of smallholder farmers and the resulting co-existence of informal and
formal value chains characterise most OIC Member Countries, different degrees of activity and
different types of policies can be observed to promote the inclusion of small-scale farmers into
formal value chains. Some countries do not appear to have a specific policy on smallholders
(e.g. Saudi Arabia, Oman and Chad); whereas, others focus all of their agricultural policies on
smallholders (e.g. Uganda, Sierra Leone and Mauritania). Yet others pursue a twin-pillar
approach where one set of policies addresses the commercial sector and the other set
addresses the smallholder segment (e.g. Indonesia, Malaysia, Senegal, and Morocco). This
reflects the heterogeneity of the organisation of agriculture in OIC countries.
Four main policy mechanisms can be identified in OIC countries that aim to integrate
smallholder farmers into formal value chains (see also Table 4-2)
1) Integrated development of commercial and small-scale farming (contract farming)
This is the policy that Indonesia, Malaysia and Senegal, for example, are following. In