Level 2 · Part 1
What a value chain is
The journey from production to final customer, and the people along it.
A value chain is the sequence of steps and actors that take a product from production to the final customer. At each step someone does work and receives payment for it. The word 'value' reminds us that each step should make the product more useful to the next buyer.
Inputs ──▶ Production ──▶ Harvest and handling ──▶ Storage
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Household ◀── Retail or market ◀── Wholesale ◀── TransportReal chains are rarely a straight line. Some farmers sell directly to households. Some products pass through a processor. Others go to a neighbouring country. Drawing your own product's chain is the first step to understanding it.
Services that support the chain
- Finance: credit, savings, mobile money, insurance.
- Knowledge: extension advice, training, market information.
- Infrastructure: roads, electricity, water, storage buildings.
- Rules and quality: food safety, standards and inspection, which differ by country.
Exercise 2.1 · Draw your product's chain
- Choose one product you know. Write it at the top of a page.
- Draw the steps from inputs to the final customer. Add boxes if there are steps not shown in the example.
- Write the name or kind of actor at each step (for example 'smallholder farmer', 'local trader').
- Mark with a star the step you know least about.
Background reading for this part:
- Developing Sustainable Food Value Chains: Guiding Principles — Food and Agriculture Organization of the United Nations (FAO), 2014