“The Value Chain Development approach looks at market dynamics and relationships between the different actors in the chain with the objective of strengthening the whole market system – enterprises, business relationships, financial networks, supporting functions, rules and norms, and the business environment – in a way that ensures greater benefits for the poor from economic growth and development.” (A Rough Guide to Value Chain Development, International Labor Organization (ILO), 2015).

There has been a lot of attention to the value chain development (VCD) approach in programs aimed at poverty reduction and rural development over the past two decades. This has led to production of numerous guides, diagnostic tools, and applications. While offering useful snapshots of current structure and performance, many of these guides fail to account for a highly adaptive and changing nature of smallholder value chains and pay little attention to the dynamic forces affecting these chains or to adaptation. Yet, understanding these dynamics and adaptation is essential for these value chains to remain competitive in turbulent markets.

Some of the crucial factors we need to take into account when analyzing smallholder value chains and their ability to adjust to changes over time include:

•           Various risks and dangers present in the political and marketing environment in which the value chain operates;
•           Conflicting interests among value chain actors which are likely to become more pronounced in the face of negative shocks;
•           Alternative economic activities smallholders could engage in if the shocks affecting their current value chain are too big to deal with;
•           Resources needed and available for smallholders and other value chain actors to make such adaptations.

Our work on these issues, summarized in this paper, aimed to have a fresh look on value chains involving smallholders from the perspective of complex adaptive systems.

Read the full article Complex but adaptive: a fresh look at smallholder value chains and their development, originally published on CGIAR PIM.