By Daniel Gregg and Daniel Hill
Much ink has been spilt on the topic of ‘value chain upgrading’ – approaches that seek to use improvements in supply chain operation, ownership, and value transfers to generate inclusive development outcomes for low and middle income countries. Few examples of ‘upgrading’ are, however, successful.
We show that value chain interventions typically fail typically on one of three requirements: (1) inclusivity – they involve substantial capture by the ‘elites’ in target communities; (2) value – they fail to generate a substantial change in the values received by target participants, and; (3) scalability- they are simply not scalable and so do not constitute substantive tools for national economic development.
We term these three objectives as ‘the crowdy three’ for the simple fact that, under commonly used approaches to supply chain interventions for value chain upgrading, they tend to crowd each other out.
We present a conceptual outline, supported by review of the literature, of the ‘crowdy three’ concept. We review the pathways available to jointly each the Crowdy Three showing that the concept provides a useful schema to describe value chain attributes and upgrading pathways. Using conceptual and empirical foundations we show that the best pathway is, perhaps surprisingly, to pursue quality assurance interventions in traditional open-market based supply chains. This is in direct contrast to existing approaches to value chain upgrading that seek to achieve scalability and/or inclusivity via closed market approaches (e.g. cooperatives, buyers groups, contract farming, etc.).
Finally, we present evidence of such an approach based on our own work on smallholder inclusive value chains (SIVCs) focused on coffee in Uganda.