Promoting value chains 2.0

Promoting
Value Chains 2.0
Knowledge Management
for Inclusive and Sustainable
Value Chain Development

Promoting Value Chains 2.0:
Knowledge Management for Inclusive
and Sustainable Value Chain Development
Project: Knowledge Management for Inclusive and Sustainable Value Chain Development
PilotajedeCafé
The ChallengeThe value chain approach was
proposed in the late 1990s and
has been broadly implemented
by governmental and
nongovernmental agencies in rural
development initiatives since the mid 2000s as
a means to reduce poverty and generate
employment in developing countries. However,
much of the effort has concentrated on the
analysis of prioritized value chains to design
action plans for the development of value
chains and less on designing and implementing
strategies to leverage this development.
performance but also their
decision-making and negotiation
processes, which in turn limits the
opportunities for innovation
throughout the chain, reducing
value chain competitiveness.
Bill Gates, in an address before the
International Fund for Agricultural
Development (IFAD) Governing Council in
Rome in February 2012, said that the new
agricultural revolution will be a digital one. He
urged the research and development
community to take advantage of the digital
revolution that is multiplying the rate of
agricultural innovation. Moreover, he stated
that new discoveries are making it possible to
bring agricultural science and technology to
poor farmers and that new information and
communication technologies (ICTs) are a
powerful tool to improve the reach and
effectiveness of agricultural extension services.
It is clear that ICTs will play a major role in
improving information and knowledge
management in the new agricultural
revolution. However, to promote a broader and
more equitable agricultural revolution,
important information and knowledge access
barriers need to be overcome. These include:
· Cultural and mental barriers that give less
value to information and knowledge as an
asset than to physical and financial assets.
actors in the chains and
the limited flow of
1
One of the main difficulties encountered in the
implementation of initiatives to promote
inclusive and sustainable value chains is the
limited access to and use of information
.
chain actors. This has a
information between
them and other value
negative impact on
not only their
and knowledge by the most vulnerable

Lessons Learned and
Recommendations
Microsoft
2
· Physical barriers that prevent a broader
access and use of ICTs by smallholders in
rural communities.
· Human barriers that limit capabilities to
effectively use ICTs to access information
and, more importantly, to effectively use this
information for decision-making and
negotiation processes.
· Social barriers, generated by weak
institutions and the lack of explicit incentives
to share information among value chain
actors, that prevent the establishment,
functionality and sustainability of
information systems.
· Financial barriers that affect the
willingness of value chain actors, especially
smallholders, to invest in the establishment
and functioning of information systems,
which in turn depends on the benefits value
chain actors anticipate and generate,
compared with the operation and
transaction costs involved.
Therefore, a major challenge to achieving an
inclusive and sustainable revolution is:
Based on an extensive review of the literature, the systematization
of selected experiences in Latin America in the application of the
value chains approach, and especially the lessons learned from
hands-on experience in designing and establishing five pilot projects
for vegetable and honey value chains in Honduras and coffee, cacao and bean value
chains in Nicaragua, the following lessons learned and recommendations can be made.
1. The value chain approach needs to move toward one that explicitly takes into
account aspects of inclusion and sustainability.
This new approach, referred here as Value Chains 2.0, aims to advance toward an
improved conceptual and analytical framework where explicit inclusion and
sustainability aspects are integrated into the design, implementation and evaluation of
intervention strategies. This approach places value chain actors, rather than their
functions, at the center of the analytical framework, from which the functions they carry
out and their performance are considered. This is fundamental for facilitating improved
information and knowledge management, since knowledge is an asset that people
accumulate and develop. It is not merely a function they fulfill for the performance of
the value chain. This analytical framework facilitates the design of leverage points and
the implementation of concrete actions.
Maria Verónica Gottret, Raúl Ernesto Gutierrez and Napoleón Molina
How to facilitate effective and equitable access
of value chain actors to key information and
knowledge, with special emphasis on those
actors with less access and therefore, less
power and develop their capacity to use this
information strategically for improving their
performance and for their decision making and
negotiation processes?

The Value Chains 2.0 approach builds on the previous approach but differs in its purpose, objective
and orientation and, most importantly, in the nature of its organizational structures and processes,
the type of relations among value chain actors and how information flows among them. It has a
stronger focus on institutional strengthening. To illustrate this, Table 1 highlights these
characteristics, together with how they need to be integrated into strategic design and
implementation.
Table 1. Characteristics of Value Chains 2.0 and its implications for the design and implementation of
strategies to facilitate their development
3Maria Verónica Gottret, Raúl Ernesto Gutierrez and Napoleón Molina
Criteria
Emphasis in the
Value Chains 2.0
approach
Leverage points Implications for strategy design and implementation
Purpose
Competitiveness
and economic,
social and
environmental
sustainability
Strengthen
knowledge
management
capabilities and
value chain
governance
Improve value chain actors’ performance for
economic sustainability
Improve decision-making capacity and negotiation
power of smallholder producers and their
organizations for social sustainability
Foster the adoption of sustainable practices for
environmental sustainability and adaptation to
climate change
Orientation
Demand-driven,
and centered on
the value chain
actors who
collaborate to
fulfill the demand
Improve value
chain actors’
capabilities to
access and use
information
Improve value chain actors’ awareness of the
importance of information and knowledge as an
asset (especially among smallholder producers
and their organizations)
Improve information access and use capabilities
Improve negotiation power to access relevant
information for decision making
Objective
Focus on
innovation to add
value along the
chain system to
achieve win-win
relationships
Facilitate
technological,
process and
institutional
innovation
Eliminate barriers that prevent the timely access
and use of information, especially among
smallholder producers’ and their organizations
Facilitate the interaction among value chain actors
to promote open innovation systems
Organizational
structures
Value chain actors
who recognize
their
interdependence
and therefore are
willing to share
information, risks
and benefits
Continuously
motivate and raise
consciousness by
making the value
of information and
knowledge sharing
explicit
Analyze value-chain key processes and the
information needed to improve the performance
of these processes.
Precisely Identify and prioritize information
demands and sources
Design strategies to implement concrete actions
for improving the timely access to and use of
information for decision making and negotiation
processes
·
·
·
·
·
·
·
·
·
·

4
2. Efforts need to be made in developing and validating appropriate methodologies and tools and
developing capabilities for proper design and implementation of information systems.
Broad practical implementation of the Value
Chains 2.0 approach requires appropriate
methodologies and a pool of facilitators with
the attitude, skills and tools required to
facilitate the design and establishment of multi-
user, custom-made information systems that
respond to the specific needs and capabilities
of different value chain actors. These
information systems need to include specific
actions to eliminate identified barriers
(cultural, physical, human, social and financial)
that limit access to and use of information,
especially among smallholder producers and
their organizations—a pre-condition to ensure
viability, maintenance and sustainability of
information systems.
Criteria
Emphasis in the
Value Chains 2.0
approach
Leverage points Implications for strategy design and implementation
Type of
relationships
Transparent and
equitable
relationships that
promote
cooperation and
build trust among
value chain actors
Promote producer
organizations’
internal
accountability and
open evaluation
processes among
value chain actors
Establish and maintain multi-user information
systems that include management, performance
and impact indicators
Continue motivation and consciousness-raising
about the importance of sharing, accessing and
using information
Develop capabilities for the use and analysis of
relevant information to establish norms, rules and
value chain standards and traceability processes
Information
flow
Effective decision
making and
negotiation
processes based
on the timely flow
of pertinent and
relevant
information
Improve the
performance of
value chain actors
by fostering
improved and
timely access to
and use of
pertinent and
relevant
information
Design custom-made information systems that
respond to the specific needs and capabilities of
the organizations involved, with an emphasis on
reducing barriers (cultural, physical, human and
social) that limit access to and use of information
Establish multi-user information systems that
include identified and prioritized information
demands to improve the performance of key
value-chain actor processes
Develop the capabilities of different value chain
actors to ensure the viability, maintenance and
sustainability of the established information
systems.
·
·
·
·
·
·

5
The K4ValueChains 2.0 project, has been
implemented since 2010 by the Tropical
Agricultural Research and Higher
Education Center (CATIE), the International
Center for Tropical Agriculture (CIAT),
Catholic Relief Services (CRS) and
Swisscontact in Nicaragua and Honduras,
and SNV, and co-financed by the
International Development Research
Centre (IDRC). The project developed a
methodological guide (now in its 2.0
version) for the design of information
systems for the promotion of Value Chains
2.0. Following the characteristics of this
approach discussed above, the
methodology includes four phases:
Phase 1: Motivation and consciousness-raising with focal producer organizations.
This methodology has been tested, adjusted
and validated through the design of five pilot
information systems that aim to respond to
the specific needs of producers' organizations
involved in the bean, coffee and cocoa value
chains in Nicaragua and in the honey and
vegetable value chains in Honduras, as well as
those of their value chain partners who
perform complementary functions along the
chain.
The principles on which this methodology is
based and that have proved to be
fundamental to increase the probability of
success follow:
· To promote inclusive value chains, smallholder organizations are the focal point for the design of
the information systems, as they are usually the chains actors with less access to information and,
in particular, make the least use of it for decision-making and negotiation processes.
Phase 2: Identification, prioritization and precision of information demands of producer
organizations, based on analysis of their key processes performance.
Phase 3: Analysis of information flows between producer organizations and other relevant value
chain actors.
Phase 4: Strategy design, negotiation and consensus building to implement concrete actions for
improving the timely access to and use of information.

· Information systems are custom designed
for the specific value chain actors involved in
the process: there is no “one-size fits all”
design, and to achieve this, active
participation of stakeholders is crucial.
· The successful establishment, functioning
and sustainability of the design systems will
depend on the commitment of the actors
involved, and their active participation in the
design processes contributes to build
compromise and ownership with the
process.
· The design, establishment and functioning
of the information systems focus on the job
to be done for the value chain actors
involved, using ICTs as needed but do not
focus on the technological gadgets
themselves. Information systems are kept as
simple and user-friendly as possible,
especially recognizing the limited capabilities
of smallholders and their organizations.
· The information systems should include
management, performance and impact
indicators that make the value added by the
systems clear to chain actors, increasing
their awareness of the importance of
information and knowledge as an asset,
especially among smallholder producers and
their organizations.
The Way Forward
The objectives of the designed information systems are described in
Table 2. Though designed and facilitated by different persons, the pilot
designs for the five value chains demonstrate certain common
objectives. All of them aimed to improve the technical service provided
for value chain development as well as accountability as a means for strengthening collective action.
Other objectives common among most of the pilot experiences are support of traceability processes
to link smallholders to differentiated markets, integral risk management and adaptation to climate
change.
Table 2. Objectives of the five pilot information systems designed
The job to be done by the information
systems designed
Pilot value chain
Nicaragua Honduras
Beans Coffee Cacao Vegetable Honey
1. Production scheduling to respond to
market demand
X X
2. Integral risk management (climate,
market and institutional)
X X X
3. Improvement of service provision for
value chain development
X X X X X
6Maria Verónica Gottret, Raúl Ernesto Gutierrez and Napoleón Molina

7
The job to be done by the information
systems designed
Pilot value chain
Nicaragua Honduras
Beans Coffee Cacao Vegetable Honey
4. Support of traceability processes to
link smallholders to differentiated
markets
X X X X
5. Accountability as a means to
strengthen collective action
X X X X X
6. Systematization and diffusion of
practices to adapt to climate change
X X X
7. Facilitate smallholder linkages to
markets
X
Implementation of these systems has begun
through an incremental process, starting with
the priority module and progressively linking it
with the other information modules. This
gradual approach makes it possible to progress
according to available human and financial
resources, thereby ensuring the sustainability
of the initiative.
During this process it is important to provide
direct support and close follow-up to continue
with the action-research activities and
document the experiences and lessons
learned. Based on this, the pilot experiences
need to be systematized and documented for
different audiences, such as policymakers,
research and development agencies, and
partner organizations involved in the design
and implementation of the five pilot
experiences. This process will lead to the
launching of version 3.0 of the methodological
guide, and other key documents.
Once the first phase of the K4ValueChains 2.0
project ends in March 2013, it will also be
important to continue follow-up the pilot
experiences over a period long enough to
evaluate changes in the management,
performance and impact indicators. This will be
crucial to deepen the learning process and to
validate and/or adjust the proposed approach
and methodology. It will also allow verification
of the thesis stated at the beginning of this
policy brief.
A second phase of the project will be needed
to scale out the results to other producer
organizations that participated in the pilot
value chains, and to scale them up to generate
institutional innovation in the value chain as a
whole. The results can also be scaled out later
to other value chains in the same countries or
to the same value chains in other countries.

Learning Alliance
Km 12½, Carretera Sur, 2 km a la derecha
Apartado Postal P-116
Managua, Nicaragua
Tel. + (505) 2265 7268
Fax: + (505) 2265 7114
www.alianzasdeaprendizaje.org
Project Leader: Maria Verónica Gottret
mgottret@catie.ac.cr

Promoting value chains 2.0

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