Mountain communities across all countries of the HKH often depend on middlemen to sell their produce (mostly in a raw or unprocessed form). Smallholder farmers and NTFP collectors in particular tend to be in a weaker position for negotiating a fair return. They get lower returns as a result of inadequate access to financial resources, farm inputs, technology, training, research, and advisory services, and this is compounded by poor governance systems and poor linkages between the actors in the value chain, as well as poor basic infrastructure such as roads, transport, markets, and communication.
Thus, understanding how markets function and how to engage in the marketplace is very important to bring mountain communities out of poverty. It is necessary to identify, quantify, and meet the requirements of customers, and to design interventions that help the mountain poor by including new innovations that can increas profit margins (i.e., by adding value to products and services, bringing processing activities closer to rural sources of produce, introducing new technologies, and improving business linkages).
The value chain development approach enables farmers and development workers to understand the entire market system and identify leverage points along the chain that offer opportunities for farmers to improve market linkages and increase their share of benefits and income. This paper presents operational guidelines for pro-poor and climate smart value chain development that provide practical tools for development practitioners to overcome value chain constraints and seize opportunities in a sustainable manner and to provide long-term benefits to mountain communities. In addition to improved competitiveness and income distribution, which are core features of value chain development, ICIMOD’s approach emphasizes inclusiveness, mountain specificities, and climate change perspectives to achieve a balance between the pro-poor and pro-growth aspects of the value chain.
The publication is organized into three sections. The first highlights the relevance of the value chain development approach in the Hindu Kush Himalayan (HKH) region and sheds light on the aim of the publication. The second describes the key principles, strategies, and approaches for value chain development of mountain products and services. The four key principles suggested in the guideline are 1) ensuring sustainable management of farm and off-farm based resources, 2) equitable benefits, 3) do-no-harm, and 4) valuing traditional knowledge. The major strategies are customizing the value chain approach to the mountain context, looking at value chains from the perspective of climate change, mainstreaming gender in the value chain, using value chains as an entry point to address systemic constraints, and engaging the private sector in value chain development.
The final section describes the process and steps, and presents specific tools for value chain development. It presents a systematic process for applying mountain specific development tools and methodologies with five stages and ten steps, from the selection of products and services for value chain development to analysis of the chain, identification of leverage points, drawing up of a strategy and facilitating implementation, and monitoring and evaluating the interventions. A number of examples are provided that illustrate identifying, assessing, and strengthening business relationships to achieve increased competitiveness in the chain and fair distribution of income among the many actor involved.