Value Chain in AgribusinessMay 14, 2019 2019-05-14 9:21
Value Chain in Agribusiness
Food Supply vs. Demand
With increasing income and improving living standards, the world has witnessed a major change in the way of purchasing and consuming food. There is a growing demand for high value commodities like fruits and vegetables, fisheries and livestock, oils etc leading to diversification of production by farmers. The quality and safety of those commodities are also of great significance to the consumers. On the other hand, the demand for convenience foods such as pre-cut fruits and vegetables, frozen foods, pre-cooked and ready-to-eat items, is growing day by day. This demands a great adaptability in terms of production, processing and distribution systems. Though there is a brighter side of these growing wealth and consumerism, the scenario raises concerns on the supply as well as demand side.
What is the importance of value chain?
Aligning agriculture alongside the value-chain framework has emerged as one of the strategies to make agricultural sector more efficient. The concept of value chain in agriculture gained much momentum since the beginning of the millennium in developed countries. Value chain is an umbrella term used for all goods and services involved in the transition of an agricultural product from farm to consumer. It describes all the activities related to different phases of production ranging from procurement of raw materials to retailing the end product to the consumer. The term Value chain is often used interchangeably with supply chain, commodity chain and agri-food system though they differ in the way they mean depending on the context and focus. Value addition to agricultural production in rural areas facilitates employment generation, improves producers access to market, reduce poverty thus facilitating the betterment of socio-economical conditions in rural communities.
Catering to the needs of these rapid transformations the sector is going through, the conventional practices are being replaced by novel phenomena, one of them being integrated vale chains, with more emphasis on coordination between farmers, processors, buyers and other stakeholders in the chain. Yet, this seems to be apprehensive owing to operational constraints the small holders face in the production and marketing leading to income inequalities. Public Private Partnerships (PPP) help overcome this by bringing together small holder farmers, government, market and consumers offering greater public benefits and value for money.
What is the role of Value Chains in attaining SDGs?
Promoting sustainable agribusiness and food value chains are considered crucial in order to achieve sustainable development goals for the period 2015-2030, particularly Goal 2 End hunger, achieve food security and improved nutrition and promote sustainable agriculture and goal 12 Ensure sustainable consumption and production patterns. While the key concepts and methods of value chain are still evolving, various organizations such as the Department for International Development (DFID), the Deutsche Gesellschaft fr Internationale Zusammenarbeit (GIZ), the International Labour Organization (ILO), The International Institute for Environment and Development(IIED) and the United Nations Industrial Development Organization (UNIDO) and other donors are working collaboratively to evaluate and update the existing value chains and also promote new ones for this greater accomplishment.
What is Contract Farming?
Contract farming involves farmers into the mainstream business wherein agricultural production is carried out on the basis of an agreement between the farmer and the buyer on production and marketing. The farmer is bound to meet the quality and quantity standards set by the buyer within the stipulated time. Nonetheless, this model has been criticized for it cannot favor the poor bargaining ability of small farmers. Also, men have better access to contract farming as compared to women.
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