value chain analysis

In value chain analysis you may want to formulate (and explore the socio- economic impacts of) policy options that are based on the opportunity costs to the whole society (= r[r]

This research work was designed to analyze the value chain analysis of medium enterprises of leather goods industry in U.P. This paper uses the value chain model developed by Dr. Michael Porter of the Harvard Business School to analyze industry activities. To achieve this purpose personal interview was conducted with the different medium size leather goods producer. The population of this study consists of those leather goods manufactures of Kanpur. Our findings revealed that the leather good producer. The main problem of the leather goods sector is the good quality supply of quality leather and woven fibers, the base materials of the industry, lack of advance technology etc. The value chain analysis used in this report is based on the primary and support activities of the producers. It does not consider the external value chains of suppliers and buyers. In addition, financial data were not considered in the value chain analysis as these would be hard to obtain and reconcile on an industry level.

Value chain analysis can help in formulating upgrading strategies in these different spheres by describing and analysing sources of competitiveness that arise from factors like local competitors, infrastructure, customers and coordination between companies, given the environmental structures of barriers to entry, trade and rent and governance (Rudenko, 2008). In reference to what parties external to the chain, e.g. government agencies, can do to aid and set in motion the processes of upgrading, Schmitz (2005) states that Business Development Services (BDS) are often used especially in the developing country context. These measures include consulting, training, business planning and funding. There is debate whether these services actually contribute positively to upgrading processes, but it seems that when combined with aid in inter-link coordination and business relationship building, they do have positive effects. Schmitz (2005) does, however, provide critique regarding the limitations of value chain analysis in upgrading. In essence, upgrading has to happen and be initiated by companies within the chain, which sets reservations on whether this will actually happen. Especially when developing country production and value chains are in question and external parties try to push for the development of a chain, barriers, e.g. size of companies, exist. Buyers may not be willing to buy from a multitude of smaller producers even when price and availability issues are not a problem. The core of this argument is that in modern value chains transaction costs play a large role and often arise from larger complexity. If a company cannot trace the origin of its products and govern the chain it is linked to, there are concrete costs in reputation and coordination that make these changes less appealing. An additional concern arises when competitive positions of lead firms are contested by upgrading activities. Lead firms play a very important role in governing the entire chain and determining the effects of upgrading activities. If these activities include functional upgrading, which restructures the mix of activities within the chain, lead firms may block upgrading activities. The role of lead firms in determining changes in value creation and distribution through upgrading activities throughout the chain are also highly relevant in the case of the Namibian diamond industry discussed later in chapter 4.

Yet the focus on the value enhancing/detracting activities within a specific firm limits the usefulness of value-chain analysis in the study of green technologies because the approach typically ignores important external stakeholders. For example, green technology frequently needs to satisfy pending or anticipated changes to government environmental regulations and policies (Bauman et al., 2002; Rehfeld, et al., 2007; Taylor, 2006). In part this government ‘push’ is often seen as necessary to achieve environmental objectives due to customer unwillingness to make green-related sacrifices on economic or quality attributes (Bamberg, 2002; Ginsberg and Bloom, 2003; Wong et al., 1996). Thus without widespread customer demand and/or government push, green technologies may not be seen as good investments by industry and therefore not be made available to displace conventional competitors (Pujari et al., 2003; Pujari, 2006; Wong et. al., 1996).

Several staff of SNV in Nepal have contributed to this value chain analysis and fi nalising it into this report. Special thanks for their efforts go to Dr. Pradeep Tulachan, Monisha Rajbhandari, Chandra Regmi, Chhabi Lal Paudel, Padam Bhandari who undertook the analysis in 2008. Thanks also to Solution Consultants Pvt Ltd which provided useful information on the national apple market dynamics. Ananta Ghimire and Rik van Keulen updated the analysis to include the latest insights and developments and fi nalised it into this up-to-date publication. Although a lot of analysis work was already done in 2008, by including the interventions and various lessons learned, we hope this becomes a more useful and interesting publication.

Extrapolation suggests that export and domestic sales of JDPs accounted for BDT 300crores in 2013. To calculate the market size we first needed to determine the number of enterprises that are currently manufacturing jute diversified products. JDPC reported that they have supported about 152 enterprises since its inception. Since, the services of JDPC are availed only by enterprises that are formally registered and engaged in formal trade we can assume that the number of active JDP manufacturers is higher than those receiving support from JDPC. Traidcraft Exchange estimated that the project could benefit about 300 JDP SMEs through its interventions. A value chain analysis conducted by GTZ Progress in 2010 provided an estimate of number of workers employed by different types of JDP producers or manufacturers. However, no account of number of enterprises was made. Since documented information on the total number of JDP manufacturers is not available, we took 152 as an estimated number of JDP manufacturers that are operational.

While we summarize the essence of VCA here to provide a structure for our discussion on finance, an in- depth understanding of this analytical approach is assumed. Key reference documents here are Kula, Downing and Field (2006) and Kaplinsky and Morris (2001). From the donor’s perspective, value chain analysis is applied to sub-sectors that have passed an initial selection process that assessed their eligibility based on selected criteria such as growth potential, potential impact on vulnerable groups (income, jobs), overall size, strategic relevance for the economy as a whole, achievable impact per dollar invested, etc1. For the selected sub-sectors, VCA then essentially analyzes the end-market opportunities, value chain structure and dynamics, and the operating environment with the overall objective to identify the main sources of growth and the key leverage points (system nodes such as large processors, geographic clusters, and policies). The VCA report is then used to develop upgrading strategies (commodity development plans) that increase competitiveness and that are sustainable and maximize impact for the selected performance indicators (sales and income growth, job creation, etc.). In this context, finance is a critical, but secondary consideration: first, the upgrade has to be feasible independent from how it is financed; then the best model to finance the upgrade has to be developed (leverage equity). In some cases finance may not be feasible (cost of capital is higher than ROI, risk too high, credit market too small) Three main steps can be distinguished in VCA. First, the main functions and firm types are identified. This involves mapping out the main activities and services involved in moving the product from the producer to the final consumer (input supply, production, processing, and distribution). The value of the end-product to the end-consumer has many components (price, taste, convenience, image, etc.) and is the cumulative

Value chain analysis of Cassava in wolaita zone was conducted with the objective of identifying cassava value chain actors and their functions, developing value chain map of cassava in the study area and identifying the value chain upgrading and market development strategies. A survey was carried out on six randomly selected kebele administrations of Wolaits zone from potentially producing districts (Gassuba and Kindo Koysha Woreda). Both primary and secondary sources of data were used to conduct the study. Primary data for were collected from 122 farmers, 48 traders and 23 consumers through application of appropriate sampling procedures and secondary data were obtained from written documents. Data were collected by using both close ended and open ended questionnaire through personal interview, group discussion, and key informant interview. Descriptive statistics were used to analyze the data. The Value chain analysis indicated that the value chain functions in the survey period were input supply, production, marketing and consumption, the major actors in the value chain are input suppliers, cassava producers, collectors, wholesalers, retailers, processors and consumers. Keywords: Value addition, Value chain, value chain map and actors

Value Chain Analysis is a complex and an industry specific phenomenon which has evolved over the period of time. Implementing Value chain analysis is highly complex in nature due to the difficulty and the differences that exist between the Value Chain Analysis requirements and the existing organizational methods and records. However, integrating the two on similar lines can enable organizations work smartly reaping greater profits. Value Chain Analysis is divided into multiple parts. An organization’s Value Chain consists of Primary, and Secondary activities which are further divided into various sub parts. The Technology involved in primary activities include Support Activities,

Handicrafts play an important role in the economy of the country and employment generation as it employs more than 7.3 million people (KPMG Advisory Services Pvt. Ltd., 2011-12); the actual figures are believed to be much higher than those captured because of it being an unorganized sector, which is largely unaccounted. According to the same report, the Handloom and Handicrafts sector is estimated to grow by 16% in next five years and is expected to be employing 17.79 million people by 2022. Even with such huge potential, the low wage rates for artisans, market price gap, lack of education and awareness of technology is forcing artisans to take up alternative livelihood options (Team, 2015). Non-farm sector comprising of cotton textiles, wood, pottery, food, metal products, other handicrafts, etc. accounted for 60% of rural GDP in 2010 and is expected to contribute to 70% of rural income by 2020 (Kashyap, 2012). This paper is an extension of previously published paper on value chain of Chikankari handicraft of Lucknow and forms part of a broader research on direct marketing of textile handicrafts of Uttar Pradesh. It aims at doing the value chain analysis by identification of value nodes, as well as noting the variations in value chain observed due to different prevalent production models in in the Varanasi Silk Sarees and Brocade. It has been observed that mostly entire family of weavers, including women, are involved in the handloom activity, however the income earned through the activity is meagre to meet the needs of entire family, thereby, keeping them in never ending cycle of poverty. The value chain analysis will help us in identifying the value nodes in the entire cycle highlighting the value addition done by weavers and finding ways to increase the income earned by adopting the most efficient value chain. Increase in income will help in sustaining the craft by motivating the weavers to continue their traditional activity and pass them to their generations. The city of Varanasi, also known as Benaras and Kashi, has a prominent place in history for its cultural heritage. The city gets its name from tributaries of Ganga river, Varuna and Asi. It is known as the ‗City of Lights‘ and _______________________________________

The study area of Meta has high milk production marketed without further processing to other products. This implies that producers at farm level not get appropriate profit share than other intermediary. Even if, there were high production of milk there were no studies in the study area related to dairy value chain analysis. Dairy value chain studies become essential to provide vital and valid information on the operation and efficiency of dairy product marketing system, for effective research, planning and policy formulation. Knowing the behaviour of each actor from input suppliers to the ultimate consumers would be give information to solve problems and give ultimate solution. Therefore, in line with the market-orientated production strategy of the country’s policy, the study is intended at bridging the information gap with regard to dairy value chains, factors affecting milk supply and to participate in the milk market in Meta district of East Hararegie Zone, Oromia national Regional state.

Value chain analysis of Paprika and Bird’s Eye Chillies in Malawi Makoka, Donald and Chitika, Rollins and Simtowe, Franklin University of Malawi, Centre for Agricultural Research and Dev[r]

The traditional, volume-based, cost accounting systems are ineffective for value chain analysis because they are designed for accountants to keep accounting ledgers and not for managers to handle operating and capital costs (Hergert and Morris 1989; Ness and Cucuzza 1995). In traditional cost accounting, non direct costs are typically allocated proportionally on the basis of direct labor hours (Kaplan 1984). This simple and straightforward procedure was introduced many decades ago when the direct labor costs typically made up the greater part of total expenses (Kaplan 1988). In today’s knowledge based economy however, this unsophisticated cost allocation procedure not only produces distorted cost estimates, but also precludes the wide application of value chain analysis, as the latter requires reliable cost estimates for individual activities.

The purpose of the study was to analyze the value chain of potato in the Ilam district. Potato is one of the major stable food and source of income for the majority rural farmers of the Ilam district. Using random sampling techniques, data were collected using semi-structured household survey with 165 respondents, 50 traders, input and service providers and along with 5 focus group discussion. Data were analyzed using SPSS and excel software. Results of the compound annual growth analysis showed that area, production and productivity is increasing significantly by 8.12, 2.87 and 2.79% respectively over 19 years in the country and 3.78, 2.84, and 3.55 respectively in the Ilam district. The farmers are generally growing local variety however; they also grow some improved varieties. The benefit cost ratio of local varieties is very low (0.68) whereas for improved varieties higher (1.73). Farmers do not adopt the grading and packaging which is generally done by the traders. The import of potato sharply increasing over the years which was 46,097 t worth of NPR 35.74 million in 2008/09 and reached to 249,368 t worth of NPR 531.25 million in 2016/17 which is 14.86 fold increases in value within 8 years. The value chain analysis reveals that, the margin received by the farmers is 27% of the retail price whereas traders and wholesalers deals in big quantities and extract substantial margin. The major constraints of potato production are diseases accompanied by weak availability of seed, high production cost, decreasing labor availability, and weak backward and forward linkage. Therefore, findings suggest that, government and developing agencies should support farmers organizations for the adoption of new variety,

Therefore, researcher felt crucial to use value chain approach (VCA) as the best solution of sustainable milk business because VCA does not limit policy use at local level, district, country as well as links in the global level (Humphrey & Schmitz, 2001 and Humphrey,2006). Because VCA is a newly practicing market-base tool determining how business receives raw materials as input, add value to the raw materials through various processes, and sell finished products to the intended customers (GTZ, 2007; Poudel, 2008 and Keane, 2008). Since 2000s, value chain analysis has gained considerable popularity in Nepal (Banjara, 2007 and Bhandari, 2014). Value chain essentially represents enterprises where many producers and marketing companies work within their respective businesses to pursue one or more end markets (Porter, 1985 and Carmen & Demenus, 2009). Value chain participants cooperate to improve overall competitiveness of the final product, but may also be completely unaware of the linkages between their operation and other upstream or downstream participants (Kaplinksky and Morris, 2002, and Hoermann et al., 2010). Therefore, VCA encompass all of the factors of production including land, labor, capital, technology, and economic activities including input supply, production, transformation, transport, handling, marketing, and distribution necessary to create, sell, and deliver a product to an intended destination (Tchale and Keyser, 2010). The commodity chains are border-crossing value adding networks of labour and production processes whose end results are finished commodity at use (World Bank, 2012). Thus, specific objectives of the study were : i) identify dairy chain functions and capabilities of micro-actors; ii) to map micro actors and analyze opportunities and constraints under

After the popularisation of the concept by Porter, it has been applied in other areas such as professional services, industries and organisation organisations (Kaplinsky, 2004; FIAS, 2007). It has been applied widely in literature in fields such as economics, agriculture, business, engineering and others. It has been applied to recognise innovative products and processes, reduce waste and costs, evaluate bottlenecks impeding productivity and highlight opportunities for increased performance (Webber and L abaste, 2010). Value chain analysis have also been applied to studies involving food and agricultural products. These studies focus on different objectives; macro level information, supply chain efficiency, cost efficiency, resource and capacity constraints, operations and planning, understanding physical, economic and informational activities, profitability, governance structures etc. (Macfadyen et al. 2012; Sinh et al. 2014; Anane-Taabeah et al. 2016; Lie et al. 2012; Jaligot et al. 2016; Nguyen, 2014; Hara, 2014). Although the concept of value chain analysis has its consumers at the core, most value chain analysis and chain strategies have not succeeded in addressing consumer value. Researchers paid much attention to quantity-cost-delivery improvement. The main trend among these empirical studies is an assessment of the value chain from the producer/production perspective. Studies have not been conducted from a consumer perspective in the quest to provide more value for the consumer (Dekker, 2003; Zokaei and Simons, 2006).

Bangladesh agriculture is dominated by small scale farming; more than 80% of Bangladeshi people are directly or indirectly involved in agriculture [21, 22]. The agriculture sector contributes 21.11% of the total GDP share, and the non-farm sector, which is also driven primarily by agriculture, has contributed another 33% in Bangladesh [22, 23]. Nowadays, smallholders are more interested in practicing agroforestry (combining agriculture and forestry) in order to produce more integrated, diverse and profitable products. Due to a huge demand of firewood in local markets, agroforestry practices are gaining more preference in Bangladesh (14, 24). Agroforestry programs in Madhupur Sal forest area have been contributing to a substantial economic output to the Bangladesh Forest Department (FD) and local people since 1989 [25, 26, 27] because these programs are considered to be of more environmental and economic importance [14, 25, 28]. Since agroforestry production in Bangladesh is increasing over the recent years, its value chain analysis is very important for farmers, intermediaries and consumers because all are affected due to value addition in marketing systems. There were very few empirical study on value chain analysis of agroforestry products in Bangladesh, so, this study takes the leading steps to analyze value chain of agroforestry products. Therefore, the objectives of this study is to identify different value chains of agroforestry products and the position of the various intermediaries within it, and also to determine the extent of value addition in terms of costs in successive stages of agroforestry products movements. 1.1. Theoretical Frameworks

At least until 2017, a very low production capacity coupled with livestock methods that are still traditional causes almost all major livestock commodities in Indonesia to close their deficits through imports. Meat, milk, eggs, and even the skin, all of them still cannot be fulfilled entirely from the country.As much as 83% of raw material for the dairy industry is imported. Leather processing industry, importing raw materials for cow leather by 3 million pieces and 13.5 million pieces (sheep and goat skin). Specifically for beef, it was noted that 2016 was the highest volume of beef imports reaching 132.74 thousand tons. As for eggs in general, the pattern of development of export volume is lower than the rate of imports per year. Data on chicken meat imports and their values during the 2012-2016 period showed quite high values compared to export volumes. Knowledge of industry value chains is needed to explore the gap in the dependence of imported raw materials.The value chain analysis carried out in the livestock base industry chain shows a map of the relationship between a number of livestock industry bases in Indonesia so as to facilitate the breakdown of dependence on raw materials. Analysis carried out on the main chain (livestock base) and joint chain (supporting base). Five farm-based industry value chains have been assembled, namely: 1) beef-cattle base industry; 2) industrial livestock-poultry meat base; 3) dairy-based livestock industry; 4) leather- based industry base; and 5) egg-based livestock industry. Core industries or prime movers namely: a) RPH on beef chains, b) industrial pasteurization in the milk chain; c) tanning industry on leather chains; d) food freezing industry on chicken meat chains; and e) egg packing house on the egg chain. The existence of the core industry greatly determines the position of the raw materials of the downstream industry.

Support activities are the activities that support the main activities in the creation of product which affect the value of the product. There are four main areas of support activities: procurement, technology development (including Research and Development), human resource management, and infrastructure (systems for planning, finance, quality and information management). Procurement is the purchasing of raw materials, supplies and other consumable items as well as assets (IMA, 1996). Technology development is know-how, procedures and technological inputs needed in every value chain activity (IMA, 1996). Human resource management is the selection, promotion and placement, appraisal; rewards, management development, and labour and employee relations (IMA, 1996). While firm infrastructure is the general management, planning, finance, accounting, legal, government affairs and quality management (IMA, 1996). The 2 main groups of activities in the value chain analysis are shown in Figure 1.

All organic businesses have to be profitable and this requires them to operate efficiently. The Food Chain Centre has undertaken three projects dealing with organic producers supplying through multiple retailers. The projects applied the concept of ‘lean thinking’ and ‘value chain analysis’. The projects were led by the Food Process Innovation Unit, which is part of Cardiff University’s Lean Enterprise Research Centre. The Lean Enterprise Research Centre enjoys a global reputation in the application of lean thinking and their work demonstrates that businesses can use the concept to secure long term competitive advantage. Lean thinking provides a way to do more and more with less and less – less human effort, less equipment, less time, and less space – while coming closer and closer to providing consumers with exactly what they want. In other words, the project focused on removing waste from supply chains and focusing on