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Publication | 2018

Value Chain Analysis for Development (VCA4D) - Methodological Brief

The EC/DEVCO is involved in supporting investment projects and policy dialogue (through budget support or other assistance schemes) to enhance development. To foster food and nutrition security, Value Chains (VC) are a major channel for agricultural development. They represent an operational framework for engaging with farmers and business.

In order to achieve the overarching goal of sustainable development, support to agri-based VCs requires that social, economic and environmental dimensions be thoroughly considered. Analysing VCs allows an understanding of relevant impact pathways, and identifies at which stages of the chain, and for which actors, investments and support could create advantages and eliminate constraints and bottlenecks. This enables the tracking of how development actions contribute to Sustainable Development Goals and EC/DEVCOs strategic objectives.

The goal of the methodology is to provide decision-makers with a set of information that relates to sustainable development strategies. This will be done by producing evidence-based elements (supported by indicators measured quantitatively or based on expert assessments) allowing to answer to 4 framing questions:

  • What is the contribution of the VC to economic growth?
  • Is this economic growth inclusive?
  • Is the VC socially sustainable?
  • Is the VC environmentally sustainable?

The purpose of value chain analysis is to provide decisionmakers with evidence-based information that relates to sustainable development strategies. It is directed to all policy makers and stakeholders, in accordance with the needs of the EC as an aid provider.

Value chain analysis (VCA) can help in decision making by assessing appropriate indicators, setting up baselines or informing on the changing situation of the actors related to the intervention.

The analytical process is based on 4 steps: Functional analysis, Economic analysis, Environmental analysis, Social analysis. The purpose is to work with stakeholders in order to gain insights on the way the VC is functioning regarding its viability and its impact on the 4 framing questions.

A methodological decision was made not to aggregate the knowledge elements into one global appraisal or a single indicator. Informing decision-makers on each of the 4 framing questions will allow them to make their own judgement.