Promoting Agricultural Value Chains
In the OIC Member Countries
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investors, the quality of export promotion programs, the competitiveness of ports and airports as well as
the road and rail system therefore all strongly impact on the degree of integration in international value
chains.
5) However, trade and investment policies also affect the competitiveness of local enterprises and value
chains vis-à-vis imports and market-seeking foreign investment. In recent years, cheap imports especially
of light manufactures such as garments and shoes have ruined local industries in many developing
countries around the world. Likewise, the global expansion of large retail chains is expected to impact
severely on local value chains. Although protectionist trade policies tend to hold back innovations and
productivity growth, there is a strong case for careful timing and sequencing of liberalisation.
6) Policies and programs for skills development and innovation. The most important constraint for vertical
business linkages, especially with large-scale processors, wholesalers and exporters, is the generally low
capacity of local SMEs to produce at a competitive cost, supply reliably and comply with standards.
Strengthening the supply capacity of local SMEs is often the focus of value chain support. This requires the
development of skills in different fields, ranging from technical skills in production processes to
management competences to in a later stage the ability to innovate and upgrade. Governments could
create tax incentives for firms to invest more in skills development and innovation.
7) In many developing countries access to finance is another major growth constraints for farmers, farmer
groups and SMEs. To acquire new production technologies and logistics to increase economies of scale, to
invest in human capital, or to comply with quality standards investment capital is required. The cost and
availability of capital is of huge influence for their performance and subsequently ability to take part in a
value chain.
8) In similar vein knowledge and expertise to prepare farmers, farmer groups and SMEs for collaboration
with other value chain stakeholders is also crucial. Smallholder support programs and investments
aiming at the supply of such specialised services can help in this and thereby indirectly impact on value
chains.
9) By increasing competitiveness of enterprise networks in a given locality firms become more attractive for
extra-regional business partners.
Based on: Altenburg (2007) and ILO (2015)