Asset building in response to value chain development: lessons from taro producers in Nicaragua

Abstract

Value chain development (VCD) dominates discussions on how to address poverty through engagement with the private sector. In the rural sector, interventions often focus on building mutually beneficial linkages for production, and marketing of agricultural and forest products. However, the poverty impacts of VCD remain an open question. This research examines the impacts of interventions in Nicaragua for the development of a taro value chain involving smallholders, a cooperative and exporters. Poverty impacts are assessed at the household level based on changes in the endowments of five livelihood assets. Data collection concerned changes in asset endowments for 127 households from 2007 to 2009. The results suggest that the poverty impacts of VCD varied considerably based on production technologies, but that, in general were limited due to households’ low levels of pre-existing asset endowments, the limited nature of the VCD interventions and a less-than-enabling market and institutional context. Greater attention to the heterogeneous needs of the rural poor is necessary. Policy makers must also assume some responsibility for the external environment affecting private sector and NGO interventions to address poverty reduction goals through VCD.