Markets and value chains 

An agricultural value chain is all the steps involved in bringing food from the farm to the plate: from growing and rearing food, to storing and processing it, to transporting and selling it.

Agricultural value chains are complex, involving producers, agro-dealers, suppliers, food processors, transporters, traders, retailers, exporters and others.

Many smallholder farmers only produce enough food for their own consumption. Some may sell a small surplus in local markets. This makes it hard for them to thrive, with limited income to improve the quality of life or to grow their businesses. Moreover, they could struggle to recover from a single bad harvest.

There are many reasons why small-scale farmers do not or cannot participate in more lucrative value chains. They may be far from a market and transport costs may be high. Some may have limited business skills or are not part of an organization to pool their resources. Often, small producers simply don’t have bargaining power and can end up earning significantly less than their larger competitors.

Agricultural markets have changed significantly in recent decades. Modern value chains that serve national and global markets now complement traditional local markets.

Meanwhile, demand for high-value products, like organic cacao or llama jerky, is growing. This means there are more opportunities for poor small-scale producers to earn, but it also increases international competition. Small-scale farmers may struggle to produce the right products to the right standards.