Value Chain Analysis

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Production In value chain analysis, a stage of production can be referred to as any operating stage capable of producing a marketable product serving as an input to the next stage in the chain or for final consumption or use. Typical value chain processes include input supply, production, assembly, transport, storage, processing, wholesaling, retailing, and utilization, with exportation included as a major stage for products destined for international markets. A stage of production in a value chain performs a function that makes significant contribution to the effective operation of the value chain and in the process adds value (Anandajayasekeram and Berhanu, 2009). Supplying the required amount effectively is a necessary condition for responsible and sustainable relationships among chain actors. Thus, one of the aims of value chain analysis is to increase the quantity of production. Understanding the mechanisms of the production more so in agriculture can greatly help to design appropriate policy that bring more gain to farmers and the whole society at large. For a long time, sector analyses have been used to measure the different economic aspects of production. However, sector analyses have not been without weaknesses. Value chain governance Governance refers to the role of coordination and associated roles of identifying dynamic profitable opportunities and apportioning roles to key players (Kaplinsky and Morries, 2000). Value chains means repetitiveness of linkage interactions. Governance ensures that interactions between actors along a value chain reflect the organization. The governance of value chains originates from the requirement to set product, process, and logistic standards, which then influences upstream o... ... middle of paper ... ...s from an understanding of the consumer demand and works its way back through distribution channels to the different stages of production, processing and marketing (GTZ, 2006). Review of Empirical Studies Value chain approach There are a number of studies that have employed the value chain approach to agricultural commodities. Fitter and Kaplinsky (2001) used a value chain analysis to examine intercountry distributional outcomes of the global coffee sector by mapping input-output relations and identifying power asymmetries along the coffee value chain. Their study showed that returns to product differentiation taking place in the face of globalization do not accrue to the coffee producers. They also found that power in the coffee value chain was asymmetrical. At the importing end of the chain, importers, roasters and retailers compete with each other for a

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