The Evolution of Agricultural Value Chains in Africa

Abstract

Agricultural value chains evolve over time in a non-linear process but generally change from traditional to transitional and then more complex forms. The type of firms found in each value chain type differs, and farmers may produce for different types of value chains. The evolution process is driven by several factors, including changing relative prices, income and population growth, urbanization, and technological change. These factors create opportunities for new types of firms along agricultural value chains, and new forms of institutional arrangements, such as contract farming and value chain finance, can begin to replace more traditional institutions like relational contracting and informal moneylenders. We finally consider the role of imported food in shaping opportunities within agricultural value chains, depending both on local factors and transaction costs.