The Value Chain Concept
A value chain is a set of linked activities that work to add value to a product; it consists of actors and actions that improve a product while linking commodity producers to processors and markets. It encompasses the flow of products, knowledge and information, finance, payments, and the social capital needed to organize producers and communities.
Information is especially important to all value chain actors and flows in two directions: markets inform producers of price, quantity and quality needs, product handling and technology options, while producers inform processors and markets on production quantities, locations, timing and production issues. In a value chain, processors and marketing agents may provide producers with finance, inputs and training on production technologies.
Value Chain Analysis
Value chain analysis allows to identify values added and or created at each stage of the chain.
It is defined by the difference between the gross value of the product, incorporating the value of all the actors which make up the production, and the incurred expenses in the production process. It gives information on the bottlenecks in the value chain and helps the stakeholders to find ways to bring more value to the products while streamlining the chain.
Agricultural value chains: A game changer for smallholders
Agriculture in developing countries is often characterized by dual value chains operating in parallel for the same product: one informal or traditional, and the other formal or modern.
Smallholders are frequently involved in informal chains that deliver products to local middlemen and then to small, local stores. Formal value chains deliver the same products, usually with better, consistent quality, from larger farms or more organized groups of small farmers to more commercial wholesalers and from there to supermarkets or exporters. Value chains may include a wide range of activities, and an agricultural value chain may include development and dissemination of plant and animal genetic material, input supply, farmer organization, farm production, post-harvest handling, processing, provision of technologies of production and handling, grading criteria and facilities, cooling and packing technologies, post-harvest local processing, industrial processing, storage, transport, finance, and feedback from markets.
The EFECS project aims to give entrepreneurs access to finance and other products and services through the development of value chains. These value chains have the capacity to offer a large number of economic and income generating activities for MSMEs, particularly women entrepreneurs, in the selected areas of Wayamba, Sabaragamuwa, Southern and Northern provinces of Sri Lanka.
The Value chains being piloted by SEFEC are Traditional Rice, Pepper, Banana and Tourism.