The colloquium was led by Sriganesh Lokanthan. The objective of this colloquium was to develop an appropriate methodology for conducting value-chain analyses in the agricultural sector, in the context of mobilising ICTs, in particular, for developing an inclusive knowledge-based economy.
The objectives of the study are:
- Achieve an in‐depth understanding of how innovations related to ICTs and related infrastructures are used (and may be used) to improve the efficiency and inclusiveness of studied agricultural value chains; the specific focus is on increasing the participation (inclusiveness) of small players (especially MSEs/SMEs) within the value chain through various forms of value addition and the reduction of various forms of transaction costs.
Harsha – When we do research, not all of our innovations will be implemented. Main reason is the transaction cost of disseminating knowledge. So we are trying to see how we can use ICTs to reduce the cost.
- Efficiency and inclusiveness of agricultural value chains through the application of ICTs, but not limited to them; specifically, identify and differentiate between the roles that can be played by the private sector vs. the public sector in providing such services to MSEs and SMEs.
- Based on the in‐depth understandings achieved above, contribute to improving indicators related to measuring progress toward inclusive knowledge‐based economies
What is LIRNEasia’s interest?
- More value addition by the poor (including small businesses). i.e. less involved in producing commoditized products and able to get a higher share of the revenues (e.g. like Amulor MahaGrapesin, India). This means understanding how the poor (including small businesses) can
- Reduce barriers to entry –i.e. make value chains more inclusive
- Use more knowledge in their activities – i.e. make value chains more efficient
- Reduce transaction costs’
- What role can ICTs and related infrastructures play
- What role can the private sector play in providing Access more services (including ICTs) targeting their needs – i.e. niches where private sector can play a role
Mr. Gunawardena – are we looking at how ICTs can be used for expanding markets?
Harsha – Yes. We have already done that through GGS-Dialog’s TradeNet service.
We can visualize this taking the case of MahaGrapes in India. MG is an exporter of grapes. The value chain actors consists of MG, grape cooperatives and grape farmers. MG and cooperatives charge only the cost doing the service. The majority of the revenues and profits goes down to the farmer. The government provided funding for this start-up. However, they have since been managing on their own.
Rohan – you find this model in South Africa such as KWD (wine industry). It was previously government-owned but now it is privatised. We need to see which type of model is better.
Erasha – are we looking at all SMEs or only a few sectors?
Sriganesh – Only tea and processed fruits and vegetables, but nothing is cast in stone yet.
Harsha – branding and certification costs money. The benefits of that need to be passed down to the smaller guys.
Rohan – we need to look at competition law when considering such ventures.
Rohan – you can have a situation where the cooperatives can begin to extract more money, farmers complain and the system can disintegrate.
Harsha – rents are not distributed equitably due to the power structures.
Mr. Gunawardena – there can be situations where seeds can be in short supply, particularly in Monaragela, Sri Lanka.
Harsha – we asked farmers how much time and money goes on deciding a crop? Answer – whether seeds are available, how much it yields, etc. But networks are isolated. Info via mobile phones can solve this issue.
Mr. Gunawardena – some farmers are encouraged to diversify the crops they are producing, e.g. tea and horticulture
Timeline – analyse two value chains between sep – dec 2010. present findings in Jan 2011. Analyse value chains in India, Bangladesh and Thailand between Feb – May 2011. Develop SME questionnaire after that, drawing on findings from the value-chain work.
Value-chain approach
Multiple agencies have already done work in refining the value chain approach
USAID, DFID, GTZ, ILO, FAO, World Bank, IDRC
Our approach:
No reinventing of the wheel: we utilize learnings from others
Pay closer attention to:
- The poor and MSEs/ SMEs, i.e. making value chains more inclusive
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Increasing use of knowledge, i.e. making value chains more efficient
Reducing transaction costs for the poor and MSEs/ SMEs - Identifying how ICTs (and related infrastructures) can play a role
- Identifying areas for private provision of needed services
Questions to keep in mind
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What is “poor”?Our earlier studies on use and adoption of ICTs at the BOP deal with people from SEC D + E
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Should we be concerned with MSEs, SMEs or both?
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Given the objectives, are there any weaknesses to the methodology? If so how can we improve it?
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What are the specific methods/ research tools to use?
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How do we ensure that we get some generalizable findings (to other sectors and other countries)
- Mapping the core processes in the value chain
- Identification of the actors.
- Identification of the services that feed into the value chain
- Mapping the relationships and linkages
- Mapping the flow of products including the geographical flow
- Mapping the changes in the value and form of the products
- Mapping the information and knowledge flows
- Mapping the number and volume of actors and jobs
- Identification of the transaction costs and ways to reduce them
- Identification of the constraints and ways to address them
- Identification of the barriers to market entry for the poor as well as for SME/MSEs and ways to address them
Harsha – traceability is very important. If we are to have our farmers competing with the EU, this is essential. but farmers may not be able to absorb costs. This is the primary “inclusive” issue we have explore.
Erasha – Having a proper certification system will contribute to this.
Erasha – understanding information flows and needs are a priority.
Rohan – the mobile phones aids bi-directionality of information flows
harsha – we need to narrow down on the innovation component
harsha – it is going to be difficult in getting employment data. but we can sample farmers to get an idea of what their cost structures are.
Erasha – this can be done for tea. but not fruits and vegetables.
harsha – we need to focus on linking transaction costs with innovation. what are the dependent and independent variables?
sriganesh – our dependent variable is efficiency and inclusiveness.
harsha – no. i think it is not just those two, but those two due to innovations.
sriganesh – innovations will then be a component of other things. so mulit
harsha – dependent variables would be labour, capital, innovations. innovations is then a component of other things (research, communication links, etc)
sriganesh – there are two things: we are looking at how we can use ICTs to disseminate innovation and innovation of ICTs in itself.
sriganesh – we want to select value chains according to:
- High export potential
- Potential for value addition
- Potential for involvement of small stakeholders (MSEs/ SMEs)
- Potential for increased productivity
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