Mainstreaming small producers

Market influence notwithstanding, current development processes attach great importance to market-led economic growth for poverty alleviation. With 'pro-poor growth' being the leitmotif running through much of the recent development debate, poverty alleviation is increasingly associated with small scale commercial farm and non-farm activities. A key concept is the development of value chains integrating farmers into local as well as high value markets.

The idea of 'value chain' assumes that market-led development generates the income sustaining itself. It is, however, different matter that more efficient markets drive out less competitive producers. So it is by no means clear to which proportion the rural poor will eventually benefit from value chain interventions. Value chain development is a necessary condition, but by itself not sufficient to respond to the problem of economic exclusion.

Amul is one the earliest example of effective value chain, much before 'value chain' as a concept came into vogue. Though it reaches out to over two million people and is profitable, it has not made its producers rich although it provides them with a reliable supplementary source of income. Using 14 different case studies, the author concludes that the value chains which are promoted by private for-profit businesses grew much faster than those which were promoted by nonprofit organizations.

Without doubt, value chain perspective helps to explore the growth potential of specific rural products and allows targeted interventions activating them. But the question is to what extent 'value chain development' can in fact serve as a core concept of rural development. Since some of value chain interventions are specific to particular products, markets provide the basis of a value chain strategy as it impacts short-term employment through raise in wages.

In reality, value chains may have manifold and highly differentiated effects on wages, job quality, competitiveness, distributional, and social & environmental issues. What's more, these effects are closely interlinked; improvements in one field may alter complex power relations at the local level, often deleterious in the long run. Given the long-term impacts of value chain interventions, immediate economic gains may remain ephemeral!

The book provides pragmatic insights on what works and what doesn't on a subject that is becoming increasingly important in fighting poverty in rural areas.

Inclusive Value Chains in India by Malcolm Harper, World Scientific, Exclusive Distribution in India by Books for Development, Bangalore, 289 pages, Rs 695