Context
Promoting value chains (VC) has become an important field of economic cooperation. Today, many development programs build on market incentives and assign an important role to the private sector in sustainable development. This strategic choice is motivated by the consequences of economic globalization: Trade liberalization, rising quality demands and the vertical coordination of production and marketing activities are changing the rules of competition – in global as well as in domestic markets.
The most challenging question for development policy is how to make this process more socially inclusive. Economic development has to be pro-poor and improve the position of small enterprises and farmers and of the working poor.
After several years of implementing value chain promotion projects it is time to take stock: Are the efforts actually contributing to broad-based poverty reduction?
There are a number of critical points to be discussed. A general question concerns realistic options for producers and workers at the margins and at risk of being squeezed out.
An important issue is the actual pro-poor growth potential of markets with low entry barriers which are often characterized by a downward trend of sales prices. The wide-spread focus on niche markets also poses questions: While niche markets are certainly interesting for small-scale producers, the number of potential beneficiaries is limited – and thus the efficiency of development activities. In summary, value chain promotion for development does not only have to be pro-poor, it also has to achieve a broad-based outreach.
