Pro-Poor Value Chain Development - Capacity.org

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90 good and a social duty. Board members of PLCs considered cooperatives to be inefficient organisations and mentioned this as one of the reasons for establishing PLCs in the first place. They also pointed out that whereas cooperatives reportedly cannot make sales decisions without the approval of the local cooperative office, PLCs are able to operate more independently. An additional advantage of the relatively small size of PLCs is that it facilitates communication between members. Table 6.1: Size of PLCs and farmers’ cooperatives that participated in the study Gada Plc 14 Chiefdale Plc 17 Shatto Plc 19 Akach primary cooperative 445 Degele primary cooperative 270 Genoby primary cooperative 451 No. of Members Didaa cooperative union 21.000 approximately Chaffe primary cooperative 1948 Bulala primary cooperative 1665 Based on the theoretical framework elaborated above, we can argue that relations between the lead firm and PLCs should be more stable than relations between the lead firm and cooperatives. This hypothesis could be tested empirically. 1.4 Value chain finance Interestingly, two types of value chain finance emerged in the BezaMar case. First, the firm provided advance payments to its supplier PLCs to enable them to finance the purchase of honey from their members. This was in marked contrast to the financing arrangements that it made with farmers’ cooperatives. Cooperatives sold honey to the lead firm on a credit basis, on the understanding that the BezaMar would pay back the cooperative (with interest) once the honey had been sold in international markets. According to the cooperatives, this arrangement led to delays in receiving payments from the lead firm that left them unable to repay their finance providers - Tepi cooperative union and the government’ credit line for rural development – on time and affected their reputation. In addition, cooperative sources argued that these types of finance were unpredictable and might not be available in future. The lack of access to finance in the middle of the value chain makes the supply system highly vulnerable to changes in access to finance in the upstream nodes (by groups of beekeepers). The particular value chain arrangements that emerged in this case enabled concerted upgrading and a distribution of financial risk that favoured the lead firm and PLCs at the expense of the reputation of cooperatives with their financiers. A summary of the value chain finance mechanisms discussed above can be found in Table 6.2.
Table 6.2: Effects of value chain interventions in the honey sector (Masha district) Mechanism Value chain governance Changes induced Effects on upgrading Effects on inclusion From spotmarket interactions to long-term contracts (from market to hybrid governance): higher level of coordination Higher degree of asset specificity created incentives for concerted upgrading Expansion in the number of beekeepers involved in long-term relations with the lead firm Social structure Higher level of bridging and bonding trust Enabled long term relations and value chain finance Concerted upgrading realised Relational upgrading (vertical) for buyer and suppliers Collective upgrading (horizontal) Lower risk for buyer and suppliers Entrepreneurial and technical capacities Productivity increases and quality improvements Product upgrading for the lead firm as a result of quality and regional differentiation Process upgrading: higher productivity among smallholder farmers, lower processing costs by the processor Higher bargaining power for suppliers (more reliable and higher quality supply) Expansion in the amount of honey traded Value chain finance Lead firm filled the gap of working capital among PLCs The cooperatives filled the trader’s shortage of working capital Value chain finance enabled different types of upgrading However, lack of longterm source of finance in the middle of the VC increased the vulnerability of the supply chain Higher risk for cooperatives Lower risks for PLCs due to more secure finance, which contributed to their inclusion Study on BOAM outcomes 91
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Copyright © SNV Netherlands Develo
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Contents Contents .................
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Contributors Eleni Abraham Eleni ho
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Timoteos Hayesso Timoteos holds a B
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Worku Tessema Worku Tessema holds a
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changing systems that require new s
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Foreword The Embassy of the Kingdom
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It is now time to focus on another
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Tables 3.1 Overview of BOAM’s kno
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ILRI International Livestock Resear
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24 transactions and production proc
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26 BOAM’s approach to value chain
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28 • Business development • Kno
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Chapter 1 Sector development Juerge
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Another major change was in the lan
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Support for sector association stre
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It should be noted here that as an
Page 39: Box 1.4 continued Other projects fu
Page 42 and 43: 42 B2B & PSS PGS C R P/T/E FO F I C
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Page 48 and 49: 48 Value chain financing A key bott
Page 51 and 52: Chapter 3 Knowledge development, in
Page 53 and 54: Figure 3.2: The innovation system (
Page 55 and 56: Description of types of knowledge n
Page 57 and 58: Establishing knowledge development
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Page 63 and 64: Chapter 4 Strengthening providers o
Page 65 and 66: Figure 4.1: Types of business devel
Page 67 and 68: • Continuous on the job training
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Page 76 and 77: 76 Box 5.1: Continued Likewise, the
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Page 81 and 82: Chapter 6 Study on BOAM outcomes Ro
Page 83 and 84: several hundred members, PLCs are c
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Page 89: services enhanced their reputation
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Page 95 and 96: farmers are willing to allocate to
Page 97: • Practitioners should pay attent
Page 100 and 101: 100 level of market demand, which d
Page 102 and 103: 102 value chain), beehives and colo
Page 104 and 105: 104 Service provider development As
Page 106 and 107: 106 References Burns J. (2010) Link
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Page 110 and 111: 110 agricultural sector, which requ
Page 112 and 113: 112 The changing role of value chai
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Page 118 and 119: 118 In addition to the EHBPEA the h
Page 120 and 121: 120 Modern beehive Transitional bee
Page 122 and 123: 122 core of BOAM’s intervention s
Page 124 and 125: 124 revenue increase in ETB of 83%
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Page 128 and 129: 128 Challenges in the oilseed value
Page 130 and 131: 130 Facilitating the establishment
Page 132 and 133: 132 BOAM supported six companies to
Page 134 and 135: 134 • Eight FCUs started innovati
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Page 138 and 139: 138 Large private investors are sta
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140 Natural and genetic resources:
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142 Business development Business d
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144 the establishment of the hub. T
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146 MSC Thesis, School of Veterinar
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148 BOAM’s engagement in the frui
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150 Improved grafting techniques (l
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152 BOAM also brokered partnerships
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154 on various aspects of fruit and
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156
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158 Upgrading capacity We consider
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160 In addition to a high degree of
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162 References Altenburg, T. (2007)
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164 Name Type of organisation Value
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