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Equitable Value-Chain
Approach forSmall Farmers in
Selected Agri-Commodities:The PRIME program(2005-2010)
EEquitablequitable VValuealue--CChainhain
AApproachpproach
forforSSmallmall FFarmers inarmers in
SSelectedelected AAgrigri--CCommodities:ommodities:The PRIME programThe PRIME program (2005(2005--2010)2010)
Promoting Rural Industries & Market Enhancement Program
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1. Agriculture for Development
(AFD) & SustainableEconomic Growth (SEG)
2. Stages of development ofrural communities & PRIMEsvalue-chain approach
3. Lessons Learned
Outline of Presentation
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Agriculture as engine of
growth for povertyreduction
In WDR 2008, World Bank isadvocating a new agriculture foragriculture fordevelopmentdevelopment(AFD) framework(AFD) frameworkwhich proposes to employagriculture as engine ofengine ofdevelopmentdevelopmentespecially for therural areas
According to the WDR, for thepoorestpoorest people, GDP growthoriginating in agriculture isabout four times more
effectivein reducing povertythan GDP growth originatingoutside the sector
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AFD equals
New Agriculture The thrust of AFD is to advance
New AgricultureNew Agricultureaccording to the
WDR 2008
New agricultureis market driven,state assisted, civil society
influenced, environment/gendersensitive & grounded intechnological and institutionalinnovations
It is led by private entrepreneurs inextended supply chains linkingproducer to consumers, including
entrepreneurial smallholders &small rural non-farm entrepreneurs
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Pathways out of Poverty equals
Pathways to New Agriculture Smallholder competitiveness: Increasing competitiveness of small farmers
thru better technology, risk mgt, lowering market transactions
Smallholder market entry: Inducing shifts from subsistence to market oriented
farming where key policy instruments is increased access to asset (land, human capital& social capital) & investment in infrastructure
Subsistence livelihoods: Improving conditions for poorest segments of ruralpopulation engaged in subsistence farming & low skill jobs by raising productivity oflabor & social assistance (e.g. conditional cash transfers; poverty alleviation fund, etc.)
Skilled occupations: Enhancing or upgrading skills for migrationto higherskilled jobs in rural farm & non-enterprises and urban employment (in the Philippinesthis might even mean migration to foreign job markets)
Environmental Stewardship: Upgrading stewardship skills smallholders &farm labor in enhancing the role of agriculture as provider of environmental services:e.g. carbon sequestration, rational water mgt, minimizing chemical pollution & soilexhaustion
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CIDAs Sustainable economicgrowth (SEG) means
Accessible, open and effective markets. entrepreneursand the poor can enter and participate substantially as major player
Sound business fundamentals. adequate investment ininfrastructure and public goods
Capable human capital. adequate public health, education &training, with capacity to innovate and unleash the power ofentrepreneurship.
Availability of equal opportunity. social & economicenvironment upholds equality of opportunity for women and men; equalaccess to essential public services like health, education, etc.
Sound environmental stewardship. guiding policies &principles in the use of limited natural resources
Responsive, accountable government (national &local). govt. institutions with effective & transparent public
management; creates macroeconomic stability; attractive policyenvironment for savings and investments
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Imperatives forsustainable economicgrowth in agriculture
Investing in people: Demanddriven skills development; essentialskills and knowledge
Growing business:MSME
support services; innovation &productivity; financial servicesdevelopment
Building economicfoundations: e.g., favorablepolicy environment on financing, infra-structure, sustainable mgt of natural
resources & environment; fiscalincentives for PPPs, etc.
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AFD & SEG affirming
PDAPs PRIME PRIME was designed in 2004 and
implemented in 2005 as the CSOs
response to the challenge of smallholder agriculture development,linking small farmers to marketsthrough agri-business and ruralindustry development
WDRs AFD was published in 2008and CIDAs SEG started to bedrafted in 2009
Winding down its implementation inthe last few months till Dec. 2010,on hindsight PRIMEs workseemed to be affirmed by the AFD
and SEG frameworks
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Stages of Development of Rural Communities
SURVIVAL PRODUCTIVITY GROWTH
INDUSTRY-ORIENTEDENTERPRISE
MICRO-ENTERPRISE
DEVELOPMENT
SUSTAINABLEAGRICULTUREAND CROPDIVERSIFICATION
AGRICULTURALPRODUCTIVITY
LAND TENUREIMPROVEMENT
AGRARIAN
REFORMADVOCACY &MOBILIZATION
AGRARIAN(COMMUNITY-FOCUSED)
AGRO-INDUSTRIAL
(SECTORAL)
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Supply/Value Chain as Vehicle for
Equitable Development Impact Supply Chainrefers to the entire vertical chain of
activities: from production on the farm, through
processing, distribution, and retailing to the consumer - inother words, the entire spectrum, from gate to plate,regardless of how it is organized or how it functions
Value Chainrefers to a vertical alliance or strategicnetwork between a number of interdependent businessorganizations within a supply chain
F Diff i i
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Factors DifferentiatingSupply Chain vs. Value Chain
Factors SupplyChain
ValueChain
Informationflow
Little or none Extensive
Principal focus Cost/Price Value/Quality
Strategy Basic Product DifferentiatedProduct
Orientation Led by Supply Led by Demand
OrganizationalStructure
IndependentActors
InterdependentActors
Philosophy Competitiveness
of the enterprise
Competitiveness
of the valuechain
Hobbs et al., Value Chains in the Agrifood Sector: What are they? How do they work?
S C
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Coop/Assn.
LMC
DISTRIBUTOR
11 BDS (NGOs) Capacity bldg fortechnology,organizational &enterprise devt
5 FIs/CPs Financing fortrading, equipment,working capital;
production
ENSURE
EQUITABLE
DIST
RIBU
TION
OFINDU
STRY/E
NTER
PRISE
GAINS
&BEN
EFITS
CONSUMERS
NGAs, LGUs, Academe, NGOs,
Donors, Private Sector Policy support; Information;Technology; Communication
PDAP-PRIME Supply/Value Chain &Stakeholders
PDAPPDAP--PRIME Supply/Value Chain &PRIME Supply/Value Chain &
StakeholdersStakeholders
FarmersFarmersFarmers
2 Industry Associations
(Commodity-based) +
1 Marketing Corporation
2 Industry Associations2 Industry Associations
(Commodity(Commodity--based) +based) +
1 Marketing Corporation1 Marketing Corporation
TradesTradesTrades
TradesTradesTrades
TradesTradesTrades
SellsSellsSells
42 Partners in3 Commodities:
Organic Rice
Muscovado Sugar
Seaweeds
42 Partners in42 Partners in3 Commodities3 Commodities::
Organic RiceOrganic Rice
MuscovadoMuscovado SugarSugar
SeaweedsSeaweeds
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Access to markets require capacitybuilding. Markets can work for the poorfarmers/fisherfolks but capacity developmentintervention takes time especially for rural
communities in stages 2, 3 & 4; softwareinvestments are as important as hardwareinvestments; viable collective MSMEs key tomarket access
Appropriate BDS & agri-extension.Financial products/services and generic BDSservices are mostly available for stages 5 & 6 but
not for stages 2, 3 & 4; need to fashion outappropriate financial products and BDS/agri-extension services (e.g., rationalizing/streamlininggovt agri-finance policies & institutions; DA-LGU-
CSO-Academe-Private Sector collaboration inBDS & agri-extension, etc.)
Lessons learned
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Strengthening local governance. nationalpolicies are important but major challenge in localization &operationalization; key element to localization isstrengthening local institutions, multi-stakeholderprocesses directed at strengthening local governance
Systems approach & institutionalcollaboration. agriculture development requires
more than just farm technology; fragmentation of servicesdo not help at all; need for a package approachcombining markets, technology, finance/credit, infra,policy reforms; institutional collaboration.
Sustainable agriculture &diversification. SA combined with agri & non-agriincome diversification will help mitigate and managevulnerabilities and risks of the rural poor, will helpincrease income of the poor, and as adaptation strategy
for climate change
Lessons learned
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Productivity improvement not enough for povertyreduction. Increasing productivity for small holder agriculture is key tofood security but will not be sufficient for poverty reduction; value-addingand an agri-business approach with government-private sector
investments in infrastructure, post-harvest/processing, access to markets,etc. are necessary
Sustainable livelihoods for rural households. Households arethe foundational economic unit for viable agri-MSMEs; developmentinterventions be directed towards management of risks & vulnerabilities offarming HHs; GE/GAD approach in improving household incomes, e.g.,technology & credit options for men and women
Lessons learned
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A final word
It would be unthinkable
to consider peace,characterized simply byworldwide absence of
conflict when millions ofpeople die yearly fromstarvation, disease and
poverty.
-Bahai International statement during the UNInternational Peace Seminar, Bangkok 1985
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DaghangDaghangsalamatsalamatsasa
pagpaminawpagpaminaw!!
Thank you forThank you for
listening!listening!
From the PDAP family