This book deals with ‘value chains’ and ‘value change’ – similarly sounding words that are not often used in combination. Value chains describe a stepwise transformation of A) land to vegetation that supports harvestable yield, B) use of land, labour, knowledge and inputs to harvest raw materials, C) convert raw materials to tradable (standardized) commodities, D) make branded products out of commodities, E) provide appreciated services, and possibly to F) create unique and lasting experiences. A standard example describes coffee beans in each step of this chain, often crossing borders in the process. Along the chain the volume gets reduced, by selection of high quality components, losses due to transport or storage, and/or wastage due to logistic limitations. This reduction in volume is more than compensated by the increase in price per unit active ingredient. The way the net (volume time price, minus costs of acquisition, processing, transport and wastage) surplus of value to the next step in the chain is shared between the partners involved depends on power, existing institutions and individual negotiation skills. Typically, farmers at the start of a value chain get only a small share of the net surplus as part of their farmgate price, as they can be interchanged for others, while traders and processors may hold monopolies (or monopsonies) and claim larger shares. Changing existing value chains (innovation) is generally done to obtain a larger share of an increased (or at least not smaller) pie. Innovations can be technical in nature (e.g. yielding more volume per unit land, or new ways of converting raw materials to branded products), social (e.g. farmer groups with grading skills and greater value capture)
Tag: commodities
Shea (Vitellaria paradoxa C.F. Gaertn.) – a peripheral empire commodity in French West Africa, 1894–1960
Burkinabé women have traded shea kernels and shea butter in periodic local markets, and on a regional scale with the densely-populated West African littoral, for centuries. This paper traces the origins of French colonial efforts to develop shea as a commodity of empire from the 1890s to independence in 1960. Colonial effo rts to incorporate Upper Volta, a French colonial backwater, into the world economy was drawn out, heterogenous, and messy. The colonial state assumed erroneously that little shea trade existed, and that producers would respond positively to market incentives. Yet, we suggest that French colonial policies failed due to a composite of factors including the limited investment in either the colony or shea as an oilseed crop, adaptation by women shea producers to the extraction of male labour and the trade opportunities created by new international borders, and the ‘blindness’ of colonial officials to the economic, social and cultural functions of periodic local markets used by women shea traders. The historical trajectory of the shea trade continues to have implications for current-day shea markets and their actors.
Oil Palm Economic Benefit Distribution to Regions for Environmental Sustainability: Indonesia’s Revenue-Sharing Scheme
Palm oil is considered a key commodity in supporting the Indonesian economy, generating both domestic revenue and foreign exchange. Such revenue needs to be distributed equally for the benefit of the government and society. This paper discusses the opportunities and challenges of the proposed revenue-sharing scheme, DBH Sawit, sourcing from palm oil, particularly between central and local governments. It examines how the proposed scheme can be implemented and what strategies can reward regions for moving toward environmental sustainability practices. Research methods used in this paper include a literature study, stakeholder interviews, the SWOT method and analytical hierarchy processes. Results indicate that DBH Sawit is one of several fiscal instruments that could potentially incentivize sustainability. It has both strengths and anticipated opportunities, such as increased CPO production and global demand for palm oil. It faces, however, serious weaknesses, such as unauthorized oil palm plantations and the absence of traceability systems. It is also threatened by unfair market and global policies. This paper recommends diverse strategies to increase palm oil productivity, accelerate sustainability certification and develop a tracing system. To accelerate the adoption of environmental sustainability, the paper advocates an ecological-based fiscal transfer system.
Pathways for implementing territorial approaches to zero deforestation commodities in Ghana
Financed by the European Union and led by the Center for International Forestry Research (CIFOR), GML is a four-year project implemented across Sub-Saharan Africa that aims to address key knowledge, technical and policy gaps related to the global impacts of the FLEGT Action Plan, as well as forest and land governance, trade in informal and legal timber products, deforestation-related commodity-based agribusiness, woodfuel and ultimately sustainable forest and land-use management and improvement of livelihoods.