Market Development (aka Value Chain Development): Myth and Reality


ASM Shahidul Haque

A development worker
Email: shahidulhaque72@gmail.com

This is part seven of a series of blog “A General Outline of Evolution of NGO and Development Work in Bangladesh“. Read previous parts here.

In the Part I of my blog, I wrote “The concepts like ‘value chain development (VCD)’ or ‘Market Development (MD)’ were promoted (as approach in development project implementation) to identify overall constraints that were hindering more production and income generating potential. NGOs and development organizations adopted VCD as approach and picked potential products or services that can, not only ensure more profit to beneficiaries but also make the process self-sustaining.”  I had also promised to focus on specific issues ‘in my future blogs’ ( at that time I was not sure about reader’s response, but now I can observe there are few but regular visitors in my blogs!), so let us focus on the MD & VCD issue-myth and reality.

I like to begin by narrating few practical experiences on the general ideas about VCD or MD as expressed by different top level implementers of such development projects (which are overall mostly wrong!!) and as a result projects failed miserably.

  1. A project leader- “VCD is very easy; it can be explained like- ‘sachet of shampoo’. “VC expert will arrange for selling all your produce”.
  2. An INGO worker-“Our project is a MD & VCD project. We distribute vegetable seeds and other inputs to farmers, and then arrange for selling to nearby market. Farmer’s income increased, so it is MD & VCD.
  3. A bureaucrat- “MD & VCD is part of our project. We have budget for constructing collection centers, where farmers will bring their vegetables. We have communicated with ‘Kawran Bazar’. We will also arrange transportation to Dhaka. The DG will inaugurate the first truck load. It will be a national event”.
  4. A project leader from NGO- “We have implemented a VCD project. We organized workshops with Super Shop owners at Hotel Sheraton. The Super Shop owners have shown interest to purchase vegetables from our producer groups. Soon there will be a visit.”
  5. A conscious intellectual- “Our farmers do not get fair price. They sell at low price at farm gate. Middle men are taking all the profit. However, Super Market prices are much higher at Dhaka. So, VCD is a must. Farmers should sell directly to Super Markets.”
  6. A VC expert of a local NGO- “We have created local service provider (LSP) to ensure quality seed and other inputs reach farmers through him. We trained him and given him monthly salary. So, it is VCD”.
  7. A Team Leader of an INGO-“We are linking our beneficiaries to European importers. We have organized visits to European buyers and attended fairs. We took government high officials, exporters and our beneficiaries to several foreign tours. Thus we have developed our VC.”

Such examples are endless. VCD & MD projects are taking root in Bangladesh from roughly around 2005. But still the concept is blurring to too many. There is confusion about definition of ‘Market’ and ‘Value Chain’. Many still think MD means putting structure at different key locations. Many others are strong believers that removing middlemen from VC will strengthen farmers- which are grossly wrong. Moreover, linking farmers with supermarket will solve price problem -is a dangerous idea. Supermarkets are no donor agency!

I would request to all to learn about VCD & MD, seriously, both in theory and practice. It is pure Economics, mixed with knowledge about Marketing and Sociology. Learn to define ‘Market’ from demand-supply perspective with a certain price (where all other factors remain constant). Identify all actors in the VC, from input to output, from production to consumption along with consumption behavior. Understand ‘functions’ of each VC actors, analyze the constraints that are hindering market growth (both volume & revenue) of that particular ‘product’ or ‘service’. Design ‘intervention’, have a good implementation plan. Find a leverage point (which actor is in the best position to contribute or has the potential to make profit!). Always remember, the solutions should come from VC actors, not imposed (like putting structure or arrange for selling to supermarket or creation of LSP). There must be ‘money’; there must be ‘win-win’ for relevant actors. Otherwise, VCD or MD will not sustain.

Readers’ views and opinions will be much appreciated.