Transforming Developing Countries Agrifood Value Chains

Abstract

The global agrifood trade is highly reliant on developing countries, which affects value chain transformation and which often results in an imbalance of governance and value addition. In order to address this imbalance and increase the overall value creation, this paper develops and empirically tests a framework for agrifood value chain transformation in developing countries. The research employs a qualitative methodology to explore the proposed framework, which is based on a value chain maturity assessment of current practice and identification of a transformation route. Three primary value chain maturity levels in developing countries are established: traditional, managed, and best practice. Each level is determined using key indicators relating to governance (vertical-horizontal coordination, and information flow) and value addition (value orientation, safety, and quality). The application of this framework to Indonesia’s cashew nuts value chain reveals a mix of traditional and managed practices. The short-medium term transformation focuses on enabling farmers, as the decoupled actors, to advance from a traditional to a more managed chain. Further, the major wholesaler and exporter are identified as highly influential in driving the transformation process. The long-term transformation focuses on developing best practices regarding branded value addition and collaborative governance. This framework offers a novel value chain transformation approach based on a maturity assessment technique leading to the identification of transformation routes. This method takes a holistic transformation approach via the evaluation all the value chain actors’ governance and value-addition capabilities. Follow-up research is required to identify the enablers and barriers of globalised value chain transformation, especially with respect to sustainability.