alue--Chain

Equitable Value
Approach for
Small Farmers in
Selected Agri
gri--Commodities:
The
The PRIME
PRIME program
program (2005 -2010)
(2005-2010)

Promoting Rural Industries & Market Enhancement Program

Outline of Presentation

1. Agriculture for Development

(AFD) & Sustainable
Economic Growth (SEG)

2. Stages of development of
rural communities & PRIME’s
value-chain approach

3. Lessons Learned
Agriculture as engine of
growth for poverty
reduction
• In WDR 2008, World Bank is
advocating a new ‘agriculture for
development’ (AFD) framework
which proposes to employ
agriculture as engine of
development especially for the
rural areas

• According to the WDR, for the

poorest people, GDP growth
originating in agriculture is
about four times more
effective in reducing poverty
than GDP growth originating
outside the sector
AFD equals
New Agriculture
• The thrust of AFD is to advance
”New Agriculture” according to the
WDR 2008

• New agriculture—is market driven,

state assisted, civil society
influenced, environment/gender
sensitive & grounded in
technological and institutional
innovations

• It is led by private entrepreneurs in

extended supply chains linking
producer to consumers, including
entrepreneurial smallholders &
small rural non-farm entrepreneurs
 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 rural

population engaged in subsistence farming & low skill jobs by raising productivity of
labor & social assistance (e.g. conditional cash transfers; poverty alleviation fund, etc.)

• Skilled occupations: Enhancing or upgrading skills for migration to higher

skilled jobs in rural farm & non-enterprises and urban employment (in the Philippines
this 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 & soil
exhaustion
CIDA’s Sustainable economic
growth (SEG) means
9 Accessible, open and effective markets. entrepreneurs
and the poor can enter and participate substantially as major player

9 Sound business fundamentals. adequate investment in

infrastructure and public goods

9 Capable human capital. adequate public health, education &

training, with capacity to innovate and unleash the power of
entrepreneurship.

9 Availability of equal opportunity. social & economic

environment upholds equality of opportunity for women and men; equal
access to essential public services like health, education, etc.

9 Sound environmental stewardship. guiding policies &

principles in the use of limited natural resources

9 Responsive, accountable government (national &

local). gov’t. institutions with effective & transparent public
management; creates macroeconomic stability; attractive policy
environment for savings and investments
Imperatives for
sustainable economic
growth in agriculture
• Investing in people: Demand
driven skills development; essential
skills and knowledge

• Growing business: MSME

support services; innovation &
productivity; financial services
development

• Building economic
foundations: e.g., favorable
policy environment on financing, infra-
structure, sustainable mgt of natural
resources & environment; fiscal
incentives for PPPs, etc.
AFD & SEG affirming
PDAP’s PRIME
• PRIME was designed in 2004 and
implemented in 2005 as the CSO’s
response to the challenge of small
holder agriculture development,
linking small farmers to markets
through agri-business and rural
industry development
• WDR’s AFD was published in 2008
and CIDA’s SEG started to be
drafted in 2009
• Winding down its implementation in
the last few months till Dec. 2010,
on hindsight PRIME’s work
seemed to be affirmed by the AFD
and SEG frameworks
Stages of Development of Rural Communities
SURVIVAL PRODUCTIVITY GROWTH

INDUSTRY-
ORIENTED
ENTERPRISE
MICRO-
ENTERPRISE
DEVELOPMENT
SUSTAINABLE
AGRICULTURE
AND CROP AGRO-
DIVERSIFICATION
AGRICULTURAL
INDUSTRIAL
PRODUCTIVITY (SECTORAL)
LAND TENURE
IMPROVEMENT
AGRARIAN
REFORM
ADVOCACY &
AGRARIAN
MOBILIZATION (COMMUNITY-FOCUSED)
STAGES OF DEVELOPMENT OF COMMUNITIES & RURAL DEVELOPMENT FUNDAMENTALS
Enterprises & Market
Participation
Agri-Productivity
Improvement & Livelihood
Diversification
Access to Basic Services &
Productive Resources

Survival Î Productivity Î Growth

Main/Priority Concerns of Households and Communities
• Security and stability of tenurial • Improve productivity & farm incomes • Stability and sustainability of farming, other
RURAL instruments • Reduce production risk & reduce livelihood sources and employment
DEVELOPMENT • Utilization of land, water/marine, forestry production cost • Off-farm and non-farm income sources
resources to ensure HH/community food • Earn additional income
FUNDAMENTALS
security • Ensure off-season livelihood
Sampling of Interventions
• Provision of Agri, Agro-forestry, CRM & NRM • Farm diversification technologies – • Enterprise and organizational mgt. skills dev’t.
Technology technology packages sustainable/organic agriculture • Product improvement, product development,
• Agri/fishery extension services • Post-harvest & processing facilities packaging, branding & labeling
(agricultural &
• Farm & fishery implements and other • Agri/fishery extension services • Technical planning & management skills &
industrial) production support technologies instruments
• Market-based farm planning & technology • Collective and scaled-up production & • Access to distribution systems in mainstream
Markets provision; e.g., identification of marketable marketing arrangements markets
crops and commodities • Good agricultural practices/GAP; internal • Product standards & certification systems;
• Local & domestic market assessments; value- control systems/ICS; Participatory including standards compliance testing facilities
chain studies Guarantee System/PGS • Strengthen supply/value chains
Financing • Self-help group-based financing approach • Agricultural micro finance and non-agri • Individual/Collective Enterprise capital
(e.g., IFAD-DAR-NMCIREMP’s Poverty micro finance • Inventory & trade financing; credit guarantee;
Alleviation Fund) • Production & livelihood micro-insurance • SME business surety/insurance support
Infra- • Farm to market roads • Common-service facilities, e.g., tillers, • Packaging facilities (district or province level)
structure • Irrigation systems threshers, small mills, storage/warehouse • Warehousing and cold-storage facilities
• Small island ports; power & water supply • Market centers
Policy Support • Rationalize and strengthen asset reform laws • Strengthen and develop small holder • Rationalize and strengthen MSME development
agriculture development policies, e.g., policies including financing, e.g., agri-agra law,
sustainable/organic agriculture, etc. etc.
Supply/Value Chain as Vehicle for
Equitable Development Impact
• Supply Chain refers to the entire vertical chain of
activities: from production on the farm, through
processing, distribution, and retailing to the consumer - in
other words, the entire spectrum, from gate to plate,
regardless of how it is organized or how it functions

• Value Chain refers to a vertical alliance or strategic

network between a number of interdependent business
organizations within a supply chain
 Factors Differentiating
Supply Chain vs. Value Chain
Factors Supply Value
Chain Chain
Information Little or none Extensive
flow
Principal focus Cost/Price Value/Quality

Strategy Basic Product Differentiated

Product
Orientation Led by Supply Led by Demand

Organizational Independent Interdependent

Structure Actors Actors
Philosophy Competitiveness Competitiveness
of the enterprise of the value
chain
Hobbs et al., “Value Chains in the Agrifood Sector: What are they? How do they work?”
PDAP -PRIME Supply/Value Chain &
PDAP-PRIME
Stakeholders
NGAs, LGUs, Academe, NGOs,
Donors, Private Sector
Æ Policy support; Information;
Technology; Communication
22 Industry
Industry Associations
Associations
(Commodity -based) ++
(Commodity-based)
11 Marketing
Marketing Corporation
Corporation CONSUMERS
5 FIs/CPs
Æ Financing for Sells
Sells
trading, equipment,
working capital;
production DISTRIBUTOR
Trades
Trades
11 BDS (NGOs) S
Æ Capacity bldg for
EFI T
technology, LMC EN
organizational & &B
enterprise devt Trades
Trades AINS
G
RISE
P
Coop/ TER
N 42
42 Partners
Partners in
in
Y/E
Trades Ass’n. T R 33 Commodities
Commodities: :
Trades
DUS
IN ••Organic
Organic Rice
Rice
OF
TIO
N ••Muscovado
Muscovado Sugar
Sugar
U
RI
B ••Seaweeds
Seaweeds
DI ST
L E
I T AB
Farmers
Farmers QU
REE
SU
EN
Lessons learned
• Access to markets require capacity
building. Markets can work for the poor
farmers/fisherfolks but capacity development
intervention takes time especially for rural
communities in stages 2, 3 & 4; “software”
investments are as important as “hardware”
investments; viable collective MSMEs key to
market access

• Appropriate BDS & agri-extension.

Financial products/services and generic BDS
services are mostly available for stages 5 & 6 but
not for stages 2, 3 & 4; need to fashion out
appropriate financial products and BDS/agri-
extension services (e.g., rationalizing/streamlining
gov’t agri-finance policies & institutions; DA-LGU-
CSO-Academe-Private Sector collaboration in
BDS & agri-extension, etc.)
Lessons learned
• Strengthening local governance. national
policies are important but major challenge in localization &
operationalization; key element to localization is
strengthening local institutions, multi-stakeholder
processes directed at strengthening local governance

• Systems approach & institutional

collaboration. agriculture development requires
more than just farm technology; fragmentation of services
do not help at all; need for a “package approach”
combining markets, technology, finance/credit, infra,
policy reforms; institutional collaboration.

• Sustainable agriculture &

diversification. SA combined with agri & non-agri
income diversification will help mitigate and manage
vulnerabilities and risks of the rural poor, will help
increase income of the poor, and as adaptation strategy
for climate change
Lessons learned
• Productivity improvement not enough for poverty
reduction. Increasing productivity for small holder agriculture is key to
food security but will not be sufficient for poverty reduction; value-adding
and 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 are

the foundational economic unit for viable agri-MSMEs; development
interventions be directed towards management of risks & vulnerabilities of
farming HHs; GE/GAD approach in improving household incomes, e.g.,
technology & credit options for men and women
A final word…

“It would be unthinkable

to consider peace,
characterized simply by
worldwide absence of
conflict when millions of
people die yearly from
starvation, disease and
poverty.”
-Bahai International statement during the UN
International Peace Seminar, Bangkok 1985
 Daghang salamat sa
pagpaminaw!

Thank you for

listening!

From the PDAP family…