Value Chain Development: Challenges, Opportunities and Intervention Strategies PDF

# CHAPTER THREE ## VALUE CHAIN DEVELOPMENT: CHALLENGES, OPPORTUNITIES AND INTERVENTION STRATEGIES ### 3.0. Introduction - There are several opportunities that one can exploit to develop value chains that can result in the production and marketing of products that will satisfy the demands of the...

# CHAPTER THREE ## VALUE CHAIN DEVELOPMENT: CHALLENGES, OPPORTUNITIES AND INTERVENTION STRATEGIES ### 3.0. Introduction - There are several opportunities that one can exploit to develop value chains that can result in the production and marketing of products that will satisfy the demands of the prevailing markets. - These opportunities, when utilized well will lead to cost efficiency, quality, diversification and predictability of supply. - The challenges on the other hand expose the actors in the value chain to the difficulties they are likely to encounter in the development of the value chain. - This will help them to take measures to address them or minimize their potential negative impact on their businesses. - An important outcome of value chain mapping is an outline of the functions, operators, supporters (service providers) and framework conditions of the value chain. - The effectiveness of the value chain in ensuring value for money, minimizing operational cost and ultimately enhancing competitiveness depends to a large extent on the elimination/ overcoming of constraints and seizing opportunities associated with the value chain (and its components). ### 3.1. Approaches to Identifying Challenges and Opportunities in the Value Chain - Constraints is defined as any factor that prevents a unit or system from being effective or achieving its objectives. - Constraints may differ from one component of the value chain to the other; it may also differ from one linkage point in the chain to another, but generally they come in the form of - lack of timely information, - poorly developed human resource, - mistrust, - inadequate material resource, - inadequate technology and - low commitment. - **Constraint Identification Approach:** - It considers the problems the producer faces in marketing his/her produce as the starting point of the value chain development. - The producer identifies these problems and works towards solving them to enable - what products should be produced?, - how do market requirements affect processing?, - how can the producer sell his product in the market?, - how is distribution affected?, and - have consumption patterns changed recently? - **Market Analysis Approach:** - It considers the evaluation of opportunities from the market perspective by assessing consumer demand as the starting point for value chain development. - It is important for the actors in the value chain to understand that they can only access market if they succeed in supplying competitive products through joint effort. - This means that all the actors must apply appropriate production and handling technologies, become business-oriented and understand each other as partners in the value chain. - The competitiveness of the value chain depends on trust, cooperation and communication between all actors. - The strength of the entire value chain depends on the performance of every single partner in the value chain.  *Figure 8: Market Analysis Approach to Value Chain Development* ### 3.2. Challenges in Value Chain Development - The challenges have been categorized under the following headings. - **1. Input**: This refers to the basic items required for production by various actors along the value chain. - The challenges at the input level include: - **Low performance genetic materials:** e.g. seed, planting material, breeding stock, etc. When these are of inferior quality, they do not give the optimum yield. - **Inconsistency in quality and supply of raw materials:** Like agro-chemicals can lead to low quality output. It can also hamper the regular supply of products to the market. - **Variability in raw material quality**: Variations in the quality of raw materials for production and processing result in inferior goods on the market, high down time (under capacity utilization), high cost of production and loss of market share. - **2. Production**: - **Limited protocols on good agricultural practices for commodity chains**: Limited availability of manuals that provide information on steps for Good Agricultural Practices (GAP). - **Producers not fully integrated into the market economy:** Many producers are not business oriented and are not producing in a business-like manner to satisfy the demands of the market. In other words, most production is not influenced by market expectations and demands. - **Misuse of agrochemicals:** This can lead to the production of inferior quality goods with serious health hazards for the producer, the consumer and the general public, loss of market share, increase in cost of production, lower competitiveness, etc. - **Seasonal fluctuations in production:** This can lead to low utilization of the factors of production, inadequate supply of goods to the market and price and income instability. - **Lack of good agricultural practices:** Can lead to the production of inferior quality goods, increase cost of production and lower productivity. - **Excessive dependence on climate:** It can sometimes lead to complete crop failure and livestock death, increases the uncertainty of production and unreliable supply of raw materials and final products to the market. - **Poor caliber and quality of labor:** This leads to low productivity, high wastage, inefficient utilization of information and technology, etc. - **3. Processing:** - **Lack of value addition to farm produce:** Caused by inadequate research and development. This affects innovativeness thus leading to lower incomes, increase in wastage and environmental problems. - **Lack of adequate processing systems:** There is no adequate processing capacity, obsolete processing equipment. These lead to high cost of production, uncompetitiveness, loss of profit margins and discourage basic production. - **Inappropriate packaging material:** Unattractive final products, shorter product shelf life and low value capturing. - **4. Marketing:** - **Stringent market requirements by supermarkets:** Refers to ever increasing safety and quality requirements by supermarkets and consumers leading to difficulties in market access. - **Barriers to external markets as a result of domestic measures of trading partners:** Subsidies provided by governments of our trading partners coupled with the removal of agricultural subsidies by our government make the domestic products uncompetitive. - **Cost of Certification:** The high cost of certification of products tends to discourage producers from accessing international markets. - **Misuse of Sanitary Phyto-Sanitary (SPS) and Technical Barrier to Trade (TBT) agreement:** Possible abuse of phyto-sanitary and technical requirements can lead to denial of market access. - **Lack of appreciation of quality management along the chain:** The various actors along the chain sometimes fail to realize that the quality of the final product delivered to the market is a combined effect of their quality management in the different segment of the chain. - **High import tariffs in the external market:** High tariffs on primary products as well as escalating tariffs on value-added products lead to limited market access. - **Inefficient distribution system:** Inefficient movement of goods and services from one end of the value chain to the other. This leads to high transaction costs, erratic supply of both inputs and final products. - **Price fluctuations:** Seasonal and cyclical movement of price due to bottlenecks in the supply of goods and instability in incomes. - **Flooding of domestic market with imported equivalents:** High importation and availability of subsidized foreign goods on the local market. This crowds out local products. - **Inelastic demand for exported commodities:** Low response of primary product consumption to lowering of prices. Thus, people do not consume more of the product even at lower prices. - **Low level of market information:** Market information is not organized in a useful form for value chain actors and limited access to available market information where organized. These lead to high transaction costs, high prices of products, and high wastage at various segments of the value chain. - **5. Consumption** - **Lack of appreciation of consumer culture and behavior:** Consumers generally have low appreciation for health and safety consciousness. This results in ineffective demand for safe and quality goods. - **Weak and inactive consumer associations:** Consumer associations are poorly organized making them weak and inactive. This does not drive the production and processing segments of the value chain to be competitive. - **Lack of effective demand for quality products:** Low disposable incomes of most households leading to low effective demand for quality products. - **Most consumers are not health or safety conscious and may not insist on buying quality products.** - **6. Physical Infrastructure** - Physical infrastructure includes irrigation, roads, storage facilities (dry and cold), utilities (water, electricity, telephone, etc.) and port facilities: these are inadequate and unreliable thus affecting production, processing, distribution and storage of primary and final products. - **7. Social Infrastructure** - Social infrastructure comprises networking for Value Chain development (strategic partnership), group formation and development, and trust among others. Their effect increases transaction costs, cheating, lack of transparency, moral hazard, and unhealthy competition among the various actors in the value chain. - **8. Policy and Administration Issues** - Policy, administration and institutions relating to certification, patenting, business establishment, standards and standardization, negotiation and enforcement of contracts, slow change in national policy in response to global trends, consistency in public policy, taxes and levies, sustainable institutions capable of supporting VC development, lack of clearly specified roles of supervising institutions. These increase transaction costs, business risk, lower business confidence as well as competitiveness. - **9. Environmental Concerns** - Environmental concerns relate to waste management and the potential unintended impact of value chain activities on the environment. This can lead to environmental degradation and loss of market opportunities (e.g. some buyers are averse to environmental degradation caused by production) and social conflicts. - **10. Socio-cultural and Business Ethics** - Socio-cultural and business ethics: these include - absence of appreciation for value addition, - slow response to change, - mistrust, - ineffective communication between actors in the chain and within actors in a particular segment of the chain, and - inappropriate orientation and behavior of operators along the value chain. These may result in the collapse of businesses (bankruptcy) because of lack of proper business succession arrangements. - **11. Technical / Technological Inadequacies** - Technical/technological inadequacies: these include - inadequate requisite technical and technological know-how, - inadequate research and development, - inadequate staff/personnel, equipment and knowledge, and - limited opportunities for value addition to by-products. These do not encourage innovativeness in products and processes. - **12. Financial** - Financial challenges: these relate to inadequate and inappropriate financial products and lack of access to financial services (credit). Financial institutions lack understanding of the sector and are not able to develop products to suit the various actors in the value chain, and the result is high cost of credit and high default in repayment. - **13. Value Chain Development and Facilitation** - Value chain development and facilitation: refers to the responsibility for the initiation and provision of resources for sustaining the facilitation, monitoring and evaluation of the value chain development process. - **14. Services** - Services: there is usually a mismatch of service need and service provision. In addition critical information is untimely and there is lack of specialization of service providers. ### Sources of the Value Chain Development Challenges 1. Operators 2. Service Providers 3. Government 4. Trading Partners (Local and External) 5. Development Partners 6. Institutions (Banks) 7. Consumers ### Opportunities for Value Chain Development - These include the following: - **Globalization of trade**: The way modern technology and transportation have integrated the world economic systems. Globalization enables us to get information about sources of inputs, market opportunities, technology, etc. that can help us to produce to meet the demands of the market. - **World Trade Organization (WTO) agreement on agriculture**: It is an organization established to break the barriers to trade and regulate international trade by ensuring the enforcement of international standards. WTO creates wider market opportunities and ensures transparency in the market at the national and international levels. - **International Standards**: These are standards set at the international level to ensure that quality goods are supplied to the market. They also prevent discrimination against weaker countries. - **Changing Consumer Preferences and Behavior**: People's taste and preferences change because of availability of alternative products on the market. This creates opportunities for new products to be introduced. - **Factor Endowment**: This has to do with comparative advantage. The producers might have certain resources that enables them to produce certain goods better that others. These resources thus become opportunities for the producers to produce more of these goods for the market. - **Advances in technology**: Advances in communication, transportation, information, production and processing technologies have created opportunities to create and add value thus ensuring the efficient production of goods. - **Proximity to the European market**: This leads to reduction in cost in terms of freight and ensures the supply of fresh products to the European market. - **Liberalization of agricultural trade**: This has led to the removal of some trade barriers and ensures the free movement of goods. - **Expanding domestic market**: Increases in population and income levels as well as changes in consumer preferences and taste have combined to expand the domestic market thus creating opportunities for producers to introduce more products onto the market. - **Trade agreements**: Agreements between regional and international economic groupings like the - Economic Community of West African States (ECOWAS) and - African, Caribbean and Pacific (ACP) and - the European Union (EU) as well as - bi-lateral agreement between trade partners have created opportunities for the production of diverse goods to satisfy the demands of the market. They have also created opportunities for accessing inputs, capital, technical assistance and technology. ### 3.4. Steps in Value Chain Development - The ultimate goal of developing and improving value chain is to increase the competitiveness of the sector on the (international) market. - Such development can be indicated by - empowerment of producers, - improved quality, - improved logistics, - cost-price reduction (improvement of margins), and - scaling up (increase of volume) on a continuous basis. **Stages in value chain improvement are detailed as follows.** 1. **Identification of Constraints and Opportunities** 2. **Participatory approaches for identifying constraints and opportunities** 3. **Design of an intervention strategy (to develop a value chain) is based on an assessment of constraints hampering and opportunities that would foster the development of the value chain.** 4. **Identification and assessment of constraints and opportunities is therefore crucial to value chain development.** 5. **Constraints and opportunities can be identified at every level of the value chain scope i.e. Meta, Micro, Meso, and Macro levels.** 6. **The participatory approach also prevents the 'hijacking' of the 'project' or process by the relatively more powerful stakeholders in the chain.** 7. **There are several tools and techniques that can be used to ensure active participation of all stakeholders during identification and assessment of constraints and opportunities.** 8. **Prominent among these are focus group discussions, key informant interviews and semi-structured interviews.** 9. **The identification and assessment of constraints and opportunities (using the participatory approach method) should be done both within and across the components of the value chain (linkages), using the relevant stakeholders.** 10. **Constraints and opportunities at various levels of operation in the value chain** - The starting point for identification and assessment of constraints and opportunities in the value chain is at the micro level. - Constraints and opportunities assessment at this level naturally ropes in the meta, meso, and macro levels in a rather complex relationship that calls for thorough analysis. - The identification of leverage points will involve all stakeholders (i.e. at the meta, micro, meso and macro levels). - The micro level will consider factors such as input provision, production, transportation, and consumption and at the meso level groups, associations, organization, NGO’s, technical Agencies such as Research and extension are involved. - Some of the factors to be considered at the meta level are socio-cultural that influence business attitudes, trust and hence the effectiveness and efficiency of cooperation within the value chain system. - The macro group is made up of district assemblies, national government and providers of utilities. Let us look at some possible constraints and opportunities that may be identified at each level. **Micro level** - Fragmented linkages between surplus and deficit areas as well as rural and urban areas - Insufficient knowledge on marketing, access to markets and market research to identify potential markets etc - Insufficient management and entrepreneurship skills and mind sets - Inefficient production, trading and processing systems (including productivity, good practices and quality assurance) - Weak value chain governance systems determining the coordination and efficiency of the information, product and payment flows between value chain operators **Meso Level** - Inefficient and inappropriate capacities of private and public services to address needs of value chain operators (service offer) - Limited capacities and willingness of potential clients to access services and pay for services (demand for services) **Macro level** - Legislation (e.g. land tenure, standards) - Economic infrastructure (e.g. road network, telecommunication, market places) - Social infrastructure (e.g. education, health) - Enforcement (e.g. phytosanitary control, contracts) - Administrative procedures (e.g. business registration) - Incentive schemes (e.g. tax holidays, free zones)  *Figure 10: Starting Point for Strategy Development: The value Chain Map* ### 3.5. Identifying Leverage Points from Constraints and Opportunities - **Prioritizing constraints and opportunities** - A priority constraint is one which when not attended to could impede the whole value chain. - A priority opportunity is one which when utilized has the potential to bring large returns to all the players along the value chain. - Nevertheless, constraints and opportunities may be numerous; some of them are critical to the sustenance of the value chain while others are not. - There is therefore the need to prioritize in order to identify the key constraints and opportunities so as to determine which of them require immediate attention. - This has to be done with the involvement of all stakeholders along the chain as constraints and opportunities differ at each level of the value chain. - As the value chain continues to operate, some new constraints and opportunities will emerge while some of the non-critical ones may become critical. - It is therefore necessary to make identification of leverage points (critical constraints and opportunities) as a regular activity. - **Selecting priority constraints and opportunities to address** - After identifying the priority constraints and opportunities, it may be necessary to select those which can be addressed. - This is because even though they may all are of priority; resources available may not be adequate and even sufficient to address all of them may not be practical owing to different factors. - Moreover, value chains operate within a governmental framework over which the players may have no control. - Regulations may even be such that priority constraints and opportunities cannot be addressed. ### Chain Formation - Important points to consider in chain formation are: - chain formation & organization, - chain design, - chain behavior and - chain culture. - **Chain Formation** is all the activities and conditions necessary to design as well as implement collaborative relations between chain links with the purpose to support the productive functioning of the chain efficiently. - **Chain behavior** refers to interaction of a chain with its environment at a cognitive, an evaluative and an active level, as well as the interaction between the constituting links of the chain. - **Chain culture** is the norms and values shared by the links of the chain with respect to mutual interaction as well as interaction with the outside world. - Outside the shared norms and values there will be a set of individual norms and values within each link in the chain too. This fact is the ground for subcultures within a chain. ### 3.6. Chain Structure - **A) Chain marketing** - In chain marketing two things are found to be important. **1. Understanding the consumer and client** - In chain marketing it is instrumental to distinguish the difference in a customer and a consumer. - A customer is a business which is the next downstream link within the value chain. Focus is on Reliability, stability etc. - A consumer is the final point of the product flow for which all the businesses within the value chain work for. Focus is on Product variety, Variability, etc. **2. Category management & retail concepts** - Here it is mandatory to understand key consumer trends. - There are three key components of consumer trends i.e. health, convenience and pleasure. - Pertaining to health consumers are conscious of their wellbeing in consuming a product or service. - Hence, a product or service to be delivered must be healthy. - Health is explained in different manner at different societies. - In modern societies healthy foods are foods which are organic, and so on. - Regarding convenience there is time factor. The appropriateness of time which the product is being delivered is related to the convenience that the consumer gets out of the consumption of a given product. - The third consumer trend component is pleasure. Pleasure is related to the sensory experience that our customers and/or consumers have to the product matters.  *Figure 11: Key consumer trend* ### 3.6.1. Strategies for chain development - **Value chain strategy** is a set of statements and guidelines at chain level with the purpose to guide the future development of the chain and its links, and based on the shared ultimate goal of the chain. Chain strategies cover domains like - market coverage, - co-ordinated investments, and - extension of the chain with new participants, innovation. - Besides chain (oriented) strategies every link in the chain has its own (supplementary) strategies. - **There are three strategies for chain development:** **I. Low-cost strategy or Chain optimization** - Due to increasing competition, producers and retailers are forced to minimize costs. - Dealing with individual parts in isolation may strengthen the economic efficiency of one part, but at the expense of others. - Therefore, the successive links must together minimize costs. - This can happen by employing ICT facilities, logistics and elimination linkages. - Key issues in this strategy are efficiency and effectiveness. **II. Integral chain care** - Consumer choices are increasingly being determined by requirements in the area of health and safety. - Care for the environment and animal-friendly production methods are becoming more important. - Striving for sustainability is the new goal set by the western society. - Hence all companies/actors in the chain need to co-operate together in order to avoid loss of consumers confidence. - Here quality assurance is the key. - Issues that should get attention in this strategy are consumers' concerns, quality, sustainability, safety & health and animal welfare. **III. Market segmentation or Chain differentiation** - The other chain strategy option is market segmentation or differentiation. - Market segmentation or differentiation refers to providing product or service to the users by the elasticity that a user has for the service or product. - This enables producers to meet their customer needs by different value creation and product differentiation.  *Table 1: Stages in chain strategy development* ### 3.6.2. Value Chain Network - **Mutually beneficial relationships** are symbiotic relationships that benefit all of the actors in a value chain and are a major trait of effective vertical linkages. - In such scenarios, various chain actors give focus to own core competencies and through collaborative action realize synergies that improve the competitiveness of the entire chain. - Trust, - long-term joint vision, and - mutual respect usually form the foundations for developing such relationships. - The importance of networking is explained in the following paragraphs. - **Knowledge transfer:** - Upgrading of production processes, technology, equipment, management systems, etc. is critical for the survival and growth of firms in a competitive marketplace. - It is often difficult for small firms to access information about global best practices. - Effective vertical linkages facilitate the transfer of knowledge between firms and create the incentives and knowledge platforms required for effective upgrading of MSES. - Prompt information transfers and transparency between vertically linked firms help a value chain respond effectively to changes in market demand. - **Quality standards**: - Well-defined, widely understood, and constantly upgraded quality standards are another defining element of effective vertical linkages. - Vertically linked firms are proactive, not reactive in a sense that large firms empower and help small firms to understand and adopt the quality standards to meet market demand. - **Embedded services**: - The frequent provision of high-quality embedded services (where a service is provided as part of the transaction at no extra cost) typifies effective vertical linkages. - Lead firms can provide a wide range of embedded services to affiliated suppliers and buyers to ensure consistent quality of end products and services. - These embedded services are often seen as an integral part of business transactions and considered a necessary cost of doing business. - **Value chain network and its functions** - A network consists of companies who share the same interests and act together to win in the markets. - A network is always composed of individual companies who act in a network to succeed and survive in the business, and such co-operation is usually voluntary. - According to Hyötyläinen (2000), one of the most important goals of networking is effective adaptation to changing circumstances. - And, networked enterprises mainly have three levels in a network in the overall system. - These are: the strategic network, the partner companies and the delivery contract companies, respectively. 1. **The strategic network** is the core of the networked enterprises and has one distinct core company that has a central role in the network. - A central role means that the core company creates and develops the strategic network and also maintains it. 2. **After the strategic network are partner companies in the model of networked enterprises.** - Partner companies are co-operating with the companies in the strategic network. The relationships between the strategic network companies and the partner companies are close and long term. 3. **The third level includes delivery contract companies needed in distribution and logistics, but these are outside the network.** - **Net chain** - a contraction of 'chain' and 'network'. A set of networks comprised of horizontal ties between firms within a particular industry or group, which are sequentially arranged based on vertical ties between firms in different layers. - In the way this term is used each network is limited to a node of the chain, e.g. a network of suppliers at the beginning of the chain, followed by a network of manufacturers, and so forth (see below).  *Suppliers, Manufacturers, Distributors, and Consumers* - **Chain knowledge** - It is a critical success factor in order to create and organize chains. - Hence a good deal of knowledge and expertise is required for chain development and networking. - Chain knowledge includes knowledge about - product design and packaging; - knowledge about market requirements and customer preferences; and - knowledge about production/distribution processes and their integration. - Value chains partners facilitate the sharing of all three forms of knowledge among chain participants creating a level playing field. ### 3.6.3. Financial Agreement/Contracts - **A) Value chain finance** - Value chain finance is considered as financial products and services flowing to and/or through a value chain to address the needs of those involved in that chain, be it a need for finance, a need to secure sales, procure products, reduce risk and/or improve efficiency within the chain. - **Value Chain Finance Relevance** 1. The value chain finance is useful for expanding rural finance and for developing enterprises. 2. Value chain finance builds on business relationships and transactions to screen & monitor borrowers, enforce contracts and manage risks & costs. 3. Value chain finance is rooted in buyers' and suppliers' desire to expand markets, and to secure or increase product quality and quantity. 4. Value chain finance takes a variety of forms in addition to cash lending, such as advances and in-kind lending. 5. The success and limits of value chain finance are tied to the quality of cooperation between actors. - Value chain finance is an intervention in the value chain organisation. - And it needs: trust: long standing relations, short-term small amounts of finance, transparency (market prices), skills, training how it works, third trusted party (cash flow control).  *Demand side Needs of finance* ### 3.7. Roles of Stakeholders - **Stakeholder theory** - Stakeholder theory describes how organizations deal and interact with individuals or groups (i.e., stakeholders) that exert an influence or are influenced by their business operations. - Donaldson and Preston (1995) defined stakeholders as "persons or groups with legitimate interests in procedural and/or substantive aspects of corporate activity". - A stakeholder is an individual or group with an interest in the success of an organization in fulfilling its mission - delivering intended results and maintaining the viability of its products, services and outcomes over time. - Scholars have identified various stakeholders for a firm such as NGOs, citizens, or employees (e.g., Busse et al., 2017; Freeman 2010). - According to Park-Poaps and Rees (2010), firms' stakeholders vary depending on different factors, such as - their perceived importance, - the time, or - the context. - However, Svensson et al., (2016) proposed the four dimensions of the focal company, - downstream stakeholders, - societal stakeholders, - market stakeholders, and - upstream stakeholders to frame the different stakeholders for the sustainable SC context. - For example, the focal company contains - top management, - middle management, - for employees as subordinated stakeholders. - The term stakeholders cover a wide variety of people which may, directly or indirectly, influence a company's development plans and strategies. - These include employees, customers, shareholders, and the community at large, and within these groups, there are two distinctions. - There are the primary stakeholders who have a complex relationship with the company. - They do have some similarities in expectations, rights, and responsibilities. - Secondary stakeholders can influence the company. - But they are **not essential** for its continued existence. - The chain operators (firms, business associations, service providers, etc.) will be responsible for the direct upgrading activities related to their enterprises. - Unless they take up this responsibility, external assistance will not be successful and will result in limited impact. - Thus, a main task in planning the upgrading strategy is the judicious choice of those chain actors who have the willingness and interest to move the chain forward. - Those assuming responsibility should be capable to contribute to the planned upgrading activities and entirely subscribe to the upgrading strategy, including the expected public benefit (economic and social change). - The main role of external actors, such as UNIDO or other development agencies, is to facilitate the value chain upgrading process. - Carmagnac (2021) proposed four roles of non-traditional SC stakeholders: - instigating a change, - supporting training or the development of standards, - facilitating the organization of actors, and - leading the SC transformation. - Unlike traditional stakeholders such as buyers and suppliers, non-traditional stakeholders comprise NGOs, social enterprises, local communities, or multi-stakeholder initiatives. - Hence, the instigating and leading role is framed as the driver while the facilitator embraces the supporter and facilitator role. - By taking different roles, stakeholders can act as a driver, facilitator, or inspector to ensure the implementation of SSCM practices. - Both GO and NGOs are key drivers and facilitators for implementing SSCM practices. - Governmental actors can establish a coherent policy framework to stimulate the industry-wide development of SSCM. - The role of stakeholders in influencing sustainability has **three characteristics.** - These are power, legitimacy, and urgency. - Stakeholders have the critical role of control and accountability. - Accountability makes the company liable for processes that happen within the supply chain. - Control is the ability of the stakeholders to regulate some of the company's activities. - As a publicly traded, global company, Eastman engages with and represents a broad range of stakeholders, from employees, communities, customers, suppliers and investors to consumers, influencers, nongovernmental organizations, regulatory agencies and academia. - We proactively engage them at the corporate, regional and local levels. ### Developing Framework Conditions - Important framework conditions for creating a sustainable organic value chain promoting biodiversity and ecosystem services, are communication, trust and cooperation of all internal and external stakeholders. - This includes information exchange, knowledge exchange, the communication of ecological values, and education. - Examples are fair prices and price transparency. - For example, the studied grain mill introduced a so-called "base price model" for long-term pricing to counteract market fluctuations. - This guarantees farmers greater security in the sale of their products. - On the one hand, consumers must be convinced and informed that organic or regional products could be more expensive and it is worth paying this extra effort. - On the other hand, farmers must be made aware of the added value of sustainable projects, both ecologically and economically. - We distinguish seven framework conditions in line with those used in other measurement frameworks (Audretsch & Belitski, 2016; OECD, 2013): - Culture and institutions, - Access to human capital, - Creation of knowledge and networking, - Market conditions, - Access to finance, - Tax and regulations and - Infrastructure and support. ### The Role and Benefits of Women in Value Chain Development - Women are crucial stakeholders in agribusiness value chains around the world. - Comprising 40 percent of the global agricultural workforce-and as much as 50 percent in many regions-women are essential to planting, cultivating, and harvesting, as well as processing, logistics, and sales. - The institutional context within which these value chains operate often defines the types of jobs available for women, the terms of their employment and their ability to fully benefit from their labor. - When women do not have access to family planning, lack proper prenatal care, or suffer from intimate partner violence, companies are impacted by lost productivity and high rates of absenteeism or turnover. - In Ukraine, in terms of fresh fruits and vegetable production, we see both women and men as equally represent and engaged in the field. - Equally means, that 45% of fruits and vegetable producers are women, and 55% are men. - They take care of production management: seeds, soil, irrigation, plant protection practices and harvesting. When it comes to trade and decision making, women and youth are frequently underrepresented. - Our project data shows that 92% of transactions and financial decisions are operated by men. - Women and youth abilities to participate in the trade process may depend on access to information, skill set and social expectations. - Despite their contributions, women face unique challenges that hamper their productivity and growth, in turn weakening rural economies, the businesses that depend on them, and the global food chain. Some of these challenges include: - Limited or no access to farmland. - Fewer opportunities for education and access to agricultural training and extension services relative to men. - Limited access and know-how regarding agricultural inputs and mechanical equipment. - Limited to no access to credit and other financial services. - Significantly lower wages for the same work as men. - Greater workloads that include the household responsibilities of cleaning, cooking, and caring for children, elders, and the home.