What Is The 'Value' In The Value Chain Approach? Smallholder Risk Assessment, Mitigation, And Coping Behavior Among High Value And Conventional Cocoa Chains In Ghana
Over the past 60 years, linking smallholder farmers to global and domestic market opportunities has been an important policy and programmatic focus for governments, non-governmental organizations (NGOs), and private companies alike. Recently, approaches to creating market opportunities for smallholder farmers have included 'value-chains for development.' This approach has been touted as a way to integrate smallholder farmers into higher-value, generally global markets, which promise to increase producer incomes and promote smallholder access to important benefits and services. Looking across the value chain development literature at many of the approaches taken, higher value market opportunities using the value chain approach seem to divide between chains that focus on certified production practices, and chains that focus on creating high value products. Examples of value chains centered on certified production practices include organic products, products free from child or slave labor, or those that meet specified levels of on-farm biodiversity. The second type of value chains are those concerned purely with product characteristics, whereby methods and cultivation or processing practices are unimportant except for how they contribute to final attributes of the product. These outputfocused chains include the cultivation of special or unique varieties aimed at niche or novelty markets, like unique varieties of cocoa or coffee, or non-traditional horticulture exports. We approach this research with two propositions: first, that shared risk management strategies, and perceptions of risk and benefits may each offer some characterization of the value chains that growers participate in. Second, at a broad, perhaps stylized level, we contend that the generic, 'value chain approach' is often not very helpful in estimating impact, illuminating participation patterns, or describing potential development benefits. This is to say, that not all iii value chains are necessarily equal in their potential to create development benefits. We contend that the particular type of value emphasized and created along the chain has important and meaningful implications at the farm-level for environmental sustainability, productivity, and household welfare. To answer these questions we look across three cocoa value chains in Ghana: one that focuses on production practices (Rainforest Alliacnce/Organic), one that focuses on high value, niche products (Fine Flavor cocoa), and finally, a conventional chain. The research is divided into three essays. The first considers if farmers in the same value chain perceive the same risks and benefits of participation. The second looks at how farmers in different chains mitigate and cope with risk. Last, we estimate t how these coping mechanisms, risk perceptions, and value chain benefits might illuminate membership patterns. The research in this thesis suggests optimism for using the value chain approach as a way to reallocate and redistribute risk, but with several important caveats. First, looking at cocoa chains in Ghana it is evident that growers face systemic risks that are severe, frequent, and pervasive no matter what value chain an individual participates in. However, the frequency and intensity of these shocks do appear to differ amongst chain groups, as do expectations for earnings and other perceived benefits of participation. Second, farmers across chains have similar approaches for risk management, preferring to use savings and other financial tools, followed by labor manipulations, household consumption reductions, and finally the sale of assets. While growers use these 'toolsets' in a similar order, the exact tools used appear to differ. We find evidence that suggests that certain tools may place unique burdens on growers and demand important tradeoffs. iv
markets; value chains; cocoa; economics; market linkages; chocolate; ghana; food value chains; smallholder farmers
Turvey, Calum G.
Gomez, Miguel I.
M.S., Agricultural Economics
Master of Science
dissertation or thesis