Methodological Brief - EnG v.2 - 2

METHODOLOGICAL BRIEF FOR
AGRI-BASED VALUE CHAIN ANALYSIS

Frame and Tools - Key Features
Version 2 - February 2021
Value Chain Analysis for Development is a tool funded by the European Commission
/ INTPA and is implemented in partnership with Agrinatura. It uses a systematic
methodological framework for analysing value chains in agriculture, livestock,
fishery, aquaculture and agroforestry. More information can be found at: https://
europa.eu/capacity4dev/value-chain-analysis-for-development-vca4d-
Agrinatura (https://agrinatura-eu.eu) is the European Alliance of Universities

and Research Centers involved in agricultural research and capacity building for
development.
The information and knowledge produced through the value chain studies are
intended to support the Delegations of the European Union and their partners in
improving policy dialogue, investing in value chains and better understanding the
changes linked to their actions
Published by:
Agrinatura EEIG
Rue Scheffer 42
Paris,
France
Authors:
Pierre Fabre, Marie-Hélène Dabat and Olimpia Orlandoni
Design
Sara Baumgart
Manuscript completed in February 2021
Disclaimer:
This document was produced through the financial support of the European Union.
The information and views set out in this document are the sole responsibility
of the authors only and should not be considered as representative the official
position or opinion of the European Union. Neither the European Union institutions
and bodies nor any person acting on their behalf may be held responsible for the
use which may be made of the information contained therein.
Front cover photos from left:

© Shutterstock, © Victoria Bancal, © Shutterstock
Printed on 100% recycled paper.

TABLE
OF CONTENTS
PURPOSE [4]
1.1 Why VCA4D? [4]
1.2 Analytical process in a nutshell [5]
1.3 Launching the analysis [6]
FUNCTIONAL ANALYSIS [8]
2.1 Fundamentals of the functional analysis [9]
2.2 Laying the foundation of the whole analysis [11]
2.3 A strategic examination of the VC [15]
WHAT IS THE CONTRIBUTION OF THE

VALUE CHAIN TO ECONOMIC GROWTH?
[16]
3.1. Profitability & sustainability of actors [17]

3.2 Total effects within the national economy [18]
3.3 Competitiveness and viability within the international economy [20]
3.4. Comparing sub-chains [21]
IS THE ECONOMIC
GROWTH INCLUSIVE?
[22]
4.1 Participation in the value chain governance [22]
4.2 Income and employment [24]
IS THE VALUE CHAIN

SOCIALLY SUSTAINABLE?
[28]
5.1 Six key domains to investigate [28]
5.2 Using the social profile [29]
IS THE VALUE CHAIN
ENVIRONMENTALLY SUSTAINABLE?
[32]
6.1 Resources, ecosystem, health [33]

6.2 Climate change [38]
6.3 Biodiversity [39]
SYNTHESIS & RECOMMENDATIONS [40]
7.1 Answering the framing questions [41]
7.2 The risk analysis [41]
7.3 Summing up benefits and negative impacts [42]
7.4. Recommendations [43]
4 VCA4D | Methodological Brief - Frame and Tools
Purpose
The Value Chains (VCs) considered in this brief are the sequences of productive actors that contribute directly to supply a
specific good to the domestic and/or export market. VCs are major channels for agricultural development due to their
capacity to mobilise resources from various economic sectors, create economic value and generate employment. They offer an
operational framework for engaging with farmers, businesses and policy makers to improve income generation in an inclusive
and sustainable way.
Past development operations frequently focused on increasing agricultural produce, whilst often ignoring the market and other
economic drivers involved. Production activities are part of a wider network of interdependent businesses and it is therefore
essential to examine them within the VC as a whole.
Moreover, interventions in agriculture seldom paid enough attention to the related environmental and social impacts. Yet, decision
makers must ponder the fact that VC activities take place in, and influence, a social and environmental context.
The European Commission/Directorate General for International Partnerships (EC/INTPA) is committed to promoting investment
in agriculture and policy dialogue (through budget support or other schemes). In order to achieve the overarching goal of
sustainable and inclusive development, support to agri-based VCs requires that economic, social and environmental dimensions
be thoroughly considered. By setting out the many effects of the VC operations, the likelihood of unintended consequences will
be reduced and bottlenecks and leverage points identified.
1.1 WHY VCA4D? the policy dialogue. Over time it enables the tracking of how
development actions contribute to Sustainable Development
The purpose of Value Chain Analysis for Development Goals and EC/INTPA’s strategic objectives.
(VCA4D) is to provide decision makers with evidence-
based information to feed sustainable development
strategies. It is directed to policy makers and stakeholders,
and in this regard aligns with the EU aims as an aid provider, • The VCA4D method delivers select information
and fits within its policy dialogue approach. on major impacts of the VC activities, but is not
a thorough study on all aspects of the VC.
Analysing VCs sheds light on impact, uncovers main
pathways, and identifies at which stages of the chain and for • VCA4D studies inform on the impacts generated
which actors, investment and support can generate benefits, inside the country. When deemed necessary,
eliminate drawbacks and constraints and foster sustainability they may be supplemented with an analysis
and inclusiveness. of activities taking place beyond the borders of
the country.
VCA4D measures key indicators that, when properly
assessed and contextualised through expert discernment, • The value chain analysis (VCA) provides a
provide fundamental information on a VC’s impact and picture of the VC for a given year. VCA4D can
sustainability. This allows for the establishment of baselines be mobilised later on for updates to assess the
and of an accurate description of the situation of actors. evolution of the VC in the various domains.
The ensuing image of the VC helps visualise practical
operations, projects and policies and can be valuably used in
VCA4D | Methodological Brief - Frame and Tools 5
1.2 ANALYTICAL PROCESS IN A NUTSHELL
The goal of a VCA4D study is to answer the following four Framing Questions (FQ) (Graph 1) using evidence-based elements, i.e.
supported by quantitative indicators or explicit expert assessment.
Graph 1. Overall analytical process
FQ1. What is the contribution of the VC to economic growth?

FUNCTIONAL
SYNTHESIS
ANALYSIS
FQ2. Is the economic growth inclusive?
FQ3. Is the VC socially sustainable?

FQ4. Is the VC environmentally sustainable?
To answer these questions, VCA4D focusses on: The work process encompasses determining data
needs and availability, carrying out collection of field
• providing quantified and evidence-based information, information, processing and computing data, and direct
combining primary and secondary data collection, and interpretation of results.
• making sense of it through an integrated multidisciplinary
analysis by a team of international and national experts
in economics, social affairs, and environment.
• A selection of indicators provides a genuine basis
The analytical process is three-fold: for answering the Core Questions by evidencing
hard facts in a quantitative way. Because they
1. Implementing a functional analysis by setting out the inform on key processes or state of affairs, these
overall VC operating features and inquiring about its indicators are crucial for decision makers. They
general organisation and the main trends and market contribute to shape a consistent framework for
perspectives. analysis and allow to compare situations and
depict evolutions.
Functional analysis is both a starting point by which the They are identified in the CQ tables of the
team of experts arranges its work plan, and a continuous chapters of this Brief.
work of refinement throughout the study. It benefits to
and from the other forms of analysis, allowing to build a • Orders of magnitude are often more important
common understanding. (and easier to capture) than very precise
figures. They are usually sufficient for decision-
It includes the definition of a typology of actors and the making. Moreover, numbers with several digits
identification of sub-chains. Both are used by the whole make reading more difficult, and are pointless
team and must be relevant to outline the benefits and considering the statistical uncertainty of most
drawbacks for the various stakeholders at the various results.
stages of the VC.
2. Performing economic, social and environmental The economic, social and environmental analyses are led
analyses in order to respond to the four Framing in parallel by the relevant experts and share important
Questions. These investigations are guided by a set of elements, such as: the same typology of actors and sub-
sub-questions, called Core Questions (CQ) (Table 1), chains; parts of the data base, e.g. production levels,
which: volume of flows, and technical coefficients (mainly
• point to required significant indicators; economic and environmental experts). They also interact
• guide the assembly and processing of data for specific investigations and analysis, e.g. on the VC
(quantitative and qualitative); governance, on marginalised groups, and on income and
• give directions for interpreting the results, job distribution (mainly economic and social experts).
highlighting specific aspects of impact.
3. Making a Synthesis of the information produced which 1.3 LAUNCHING THE ANALYSIS
gives meaning to the many results, individual and
combined. VCAs are realised upon request by EU Delegation (EUD) or EC/
INTPA and their partners. All studies start with a discussion
Evidence-based indicators and qualitative assessments engaging the team of experts, the EUD, EC/INTPA, and the
are reviewed and discussed among the team of experts. VCA4D Project Management Unit (PMU), in order to ascertain
The way they relate to each other is examined, analysing the VC challenges and issues, contextual questions and the
interactions and trade-offs. To appraise their significance, particular expectations of decision makers and stakeholders.
they may be compared to other available information
(order of magnitude of other activities, benchmarking Close attention must be paid to the EUD involvement in
with other sectors or countries…). They are analysed in the VC. Understanding the context, motivations and specific
relation to the economic, societal and natural endowment needs that led to the request is crucial. From this early
context of the country, determining as much as possible understanding, the experts determine the main difficulties, key
how this context affects the VC results and how the VC issues and expectations. They outline the preliminary scope
operations impact on it. of analysis that they will refine during their initial field work,
particularly regarding the delineation and the components of
Eventually, the synthesis combines: the VC system.
• Answering the four Framing Questions;
• Taking an integrated perspective on growth,
inclusiveness and sustainability;
• Shedding light on risks, strengths and overall • The experts’ time is limited. They must carefully
benefits; decide on which data is most important so as
• Recommendations. to focus on the most relevant aspects for the
decision makers and not lose time collecting
information that will not significantly improve the
• To be effective, the multidisciplinary team has to results.
work in an integrated way and with a collaborative • At an early stage they must appraise the status
mindset. of the secondary data, statistics and other
information at hand. Then they have to arrange
for the collection of information during missions;
The goal is to enable decision makers’ own judgement conducting additional surveys if necessary; and
by informing them on each of the four framing questions. identifying and training of national experts,
Deliberately, the VCA4D method does not aggregate all the students, or surveyors involved in the study
knowledge elements into one single indicator. whenever appropriate.
It is to be noted that although those studies are neither

a project formulation nor a project evaluation process,
the team of experts is expected to provide its views and
recommendations, connecting their knowledge and the
indicators within a comprehensive and systemic perspective
on the VC.
• In their conclusion, the experts may call for

relevant complements to their work, e.g.
technological benchmarking of some stages of
the chain, targeted agronomic diagnosis or further
understanding of the stakeholders’ interactions
with territorial authorities.
© Shutterstock
Table 1. Framing and Core Questions
FRAMING AND CORE QUESTIONS
Economic Analysis Social Analysis Environmental Analysis
FQ4. Is the VC
FQ1. What is the contribution of the
FQ3. Is the VC socially sustainable? environmentally
VC to economic growth?
sustainable?
CQ1.1. How profitable and CQ3.1. Are working conditions throughout CQ4.1. What are the potential
sustainable are the VC activities for the VC socially acceptable and sustainable? damages of the VC on
the actors involved? Do VC operations contribute to improving resource depletion?
them?
CQ1.2. What is the contribution of the CQ4.2. What are the
VC to the GDP? CQ3.2. Are the land and water rights potential damages of VC on
implemented throughout the VC socially ecosystem quality?
CQ1.3. What is the contribution of the acceptable and sustainable?
VC to the agriculture sector GDP? CQ4.3. What are the potential
CQ3.3. Throughout the VC, do actors foster damages of the VC on
CQ1.4. What is the contribution of the and put into practice gender equality? human health?
VC to the public finances?
CQ3.4. Do VC activities contribute to CQ4.4. What is the potential
CQ1.5. What is the contribution of the upgrading and securing the food and impact of the VC on climate
VC to the balance of trade? nutrition conditions? change?
CQ1.6. Is the VC viable in the CQ3.5. Is social capital enhanced by CQ4.5. Does the potential
international economy? VC operations and equitably distributed impact of the VC on
throughout the VC? biodiversity deserve specific
studies?
CQ3.6. Do the VC activities contribute to
improving the living conditions of the
households through acceptable facilities and
services?
FQ2. Is this economic growth inclusive?
CQ2.1. How is income distributed across actors of the VC?
CQ2.2. What is the impact of the governance system on income distribution?
CQ2.3. How is employment distributed across the VC?
Addressing the 4 Framing Questions
Cross-cutting CQ. Which risks may affect the performance of the VC?
Functional analysis
The functional analysis aims to build an overall description of the value chain system. It identifies and characterises the main
actors and stakeholders involved, and the main strategic development challenges faced. From the outset of the study, it allows
the multidisciplinary team to elaborate a general common understanding of the VC operations, and to ascertain the scope of
analysis. Essential elements include determining a typology of actors, the various sub-chains and the geographic and time
frames, which form the basis of all the analyses in order to reply to the framing questions.
Key components forging the value chain system are: the sequence of products, the actors involved, the functions they fulfil,
the flows linking the actors and the overall organisation and governance of the VC (Graph 2).
Graph 2. Overview of the functional analysis
PRODUCTS Which products?

IDENTIFICATION
Who does what? How?

ACTORS
ENQUIRIES
Exchange between actors?

FUNCTIONS Location of flows?
How many? How much?
FLOWS
Trends?
GOVERNANCE ...
Flow chart
Common typology
Sub-chains
Geographical boundaries
Time span
SCOPE OF ANALYSIS
The functional analysis extends over the whole study period, progressively building the overall image of the VC operations. It
feeds the other analyses with shared information. It helps to guide the course of the study through harmonising the various
experts’ perspectives on its general configuration.
2.1 FUNDAMENTALS OF THE FUNCTIONAL Particular attention has to be given to: (i) seasonality of
ANALYSIS activities, (ii) diversity of quality of products, (iii) use of
sub-products and losses.
In practice, the construction of the common interdisciplinary The descriptive elements derive mainly from secondary
framework for the VC encompasses a broad range of sources, complemented by specific economic and
information, quantitative data and qualitative assessments. environmental data collection undertaken by the team
It proceeds by: whenever needed.
Therefore, all experts refer to the same technical
• Exposing the main features of the value chain data and elements (e.g. yields, loss rates, processing
(Table 2; Illustration 1); coefficients, etc.) for a coherent analysis.
The building blocks portraying the VC include the series
of product(s) along the chain from farms to end-markets • Examining the VC organisation and governance,
(i.e. domestic markets and ports of export); the succession overall and at every level (Table 4);
of steps from the initial (agricultural) production to the This investigative work is based on organisational,
final in-country consumer market or point of export; the institutional and/or “structure and conduct” analysis.
actors involved at each stage; the geographical location Evidence comes from secondary sources and
of the activities and operations; the main material, complementary economic and social investigations.
financial and information flows among actors and Particular attention has to be given to: (i) the relative
between stages of the VC. weight of the VC product in the overall activities of
each actor and thus in their strategies, (ii) coordination
• Reviewing the main technical processes and arrangements between agents (Illustration 2), (iii) market
practices (Table 3); trends, (iv) policies and projects shaping the context.
For this task, the team documents the various When dealing with an export product, a rapid market
technologies used at every step of the VC. It lists analysis should shed light on demand trends, business
categories of activity, collects or measures technical structure (highlighting dominant actors), and possibly
coefficients (e.g. raw material/processed product) and on price differentials with competitors and the share of
productivity ratios, (e.g. agricultural yields) benchmarks, the value of the exported product in the final consumer
and outlines the main physical constraints. It also brings goods abroad.
into focus existing technical diagnoses (e.g. agronomic
or industrial) and production challenges but does not
carry out a thorough technical investigation (although
the report may recommend it for the future).
© Shutterstock
Table 2. The building blocks of the VC description
KEY ELEMENTS USUAL INDICATORS & TOOLS
• E.g. cocoa, beef, banana, fish, tomato concentrate, ready

meals, clothes...
• Product at various stages: cotton/yarn/clothes, paddy/white
Main products • List, with main quality features
rice...
• Co-products, by-products: oil/oil cake, rice bran, leather...
• Varying quality level (top/bottom of the range) and standards
• Sequence of technical and organisational functions along the • Matrix of functional

Functions & chain (progressive elaboration of the end-product: nature, relations
Steps quality, place of delivery…), i.e. input supply, production, • Resources and utilisation
assembly, processing, wholesale, export, retail, etc. table
• Operators directly involved in the production chain and

important input and service providers: activity, size, number;
• Technical practices of different types of farmers, processors, • Description: activity, capital,
sellers, providers… including existing diagnosis (e.g. agronomic volumes…
diagnosis of farming systems and studies on environmental • Relative value of the various
Actors degradation). farm products
• Business organisation of each type of actors: • Number of people and/or
– number of units, locations, equipment sharing… enterprises
– relative importance of the VC production in the overall
activity of the actors
– internal decision making (Who? How?...)
• Areas of production, sites of marketing, places of

Location of consumption…
• Map (actors, flows)
activites • Ports of import and export
• Exports: place of final consumption
• Flow chart
• Physical transfers of products between actors • Matrix of flows and
• Marketing networks and distribution channels exchanges (physical,
Flows of
• Imports: actors involved, volumes, time seasonality, quality financial…)
products
• Exports: channels and typology of exporter, logistics, • Matrix of relationships
regulatory framework • Diagram of information flows
• Maps
• In practice, for each VCA4D study, COLEACP (www.coleacp.org) will provide information on:
– Market trends on national, regional and international markets, combining analysis of publicly available data and
own market insights;
– The main data sources;
– Useful complementary elements or sources.
Illustration 1. Founding elements of the Functional Analysis, example of a rice value chain
Products Functions Actor Upstream
Paddy rice Step 1

Growing Farmer
seed
Paddy rice Trading Collector Step 2
Processing Processor Step 3
Husked Wholesaler Step 4

Marketing
rice & Retailer
Downstream
Illustration 2. Matrix of relationships, example of a cocoa value chain
Types of actor Wet bean Certified wet Certified wet Drybean Wet bean Certified
farmer bean farmer bean farmer medium fermentary wet bean
fermentary fermentary
Wet bean
Open market
fermentary
Certified wet bean
Open market Contract
fermentary
Dry bean exporter Open market Open market Contract
Certified dry bean Vertical

Contract
exporter integration
This investigation uses a wide range of quantitative data. • What is the defined scope for the analysis?
Quantitative information and indicators include volumes, Actors involved and identified channels, timeframe
number of people and enterprises, prices at different stages, (year, period, season…) and geographic scope (zones,
etc. They come from official statistics, secondary data, surveys regions…).
and interviews. They inform in a tangible way on the reality
of the elements put forward and on their representativeness. • Are there specific activities, actors or production
They may be calculated more easily and appear more clearly systems to focus on?
by using the tools proposed in Tables 2, 3 and 4. Data quality Particular context (technical, environmental, social,
must be carefully assessed (see note in section 7.1). policy-related…) or issues raised by key actors (local
decision makers, private sector, EU Delegations…) may
2.2 LAYING THE FOUNDATION OF THE WHOLE point at special study needs.
ANALYSIS
• What is the common typology of actors to be used
In the early stages of the study, the functional analysis by all experts?
unveils possible options for carrying out the economic, social An appropriate typology of actors fulfilling the same
and environmental analyses. The multidisciplinary team has function allows for describing and assessing the
to set the priority elements to review the subsequent data diversity of situations, benefits and drawbacks in the
collection and its overall strategy by answering the following value chain, and potentially the foreseeable evolutions.
questions:
This common typology is essential for analysing the shared interests: geographic proximity, technological
farming actors, and possibly processors and traders. match, social or commercial organisation, etc.
It must be determined and agreed upon through an Identifying such combinations of actors and the
interdisciplinary discussion within the whole team. Key specific features of their exchanges and inter-actions
features used for shaping the typology are contextual. (technical, financial, commercial, social….) outlines
Common differentiating variables involve the specific sub-sets within the overall VC system, thus named
quality of produce, the size of the business, the productive “sub-chains”. Particular development issues (e.g. on-
equipment and capital, the technological processes in going private projects, sectorial challenges or policy
use (agricultural mechanisation, irrigation, artisanal or concerns) can also guide in defining the relevant
industrial processing, etc.). Geographical and ecological sub-chains to analyse. Sub-chains must be examined
zones may also be significant for distinguishing types. separately as “parts” of the VC, considering their
Usually, typologies are based on the structural features distinctive characteristics and casting light on their
setting the production conditions and the market access. activities, organisation and outcomes.
The resulting performance and impact for each type
of actors are evidenced by the economic, social and Sub-chains encompass particular series of actors,
environmental analyses. the flows between them and possibly the specific
arrangements and governance system linking those
The purpose of exposing various types of actors in the actors. A sub-chain may comprise the whole series
VC analysis is to assess and compare their situation of functions (from farm to end-market) in a separate
linking it with production processes and/or economic, way or involve common actors with other sub-chains.
social and geographical conditions, therefore shedding Sub-chains often tally with specific types of actors of
light on the actors’ diversity and dynamics. This range the common typology (Illustration 3).
of situations may entail varied diagnoses and more
targeted recommendations. The purpose of considering the sub-chains in the VC
The use of the same common typology of actors by analysis is to assess their distinct economic, social
all experts secures consistent and structured results. and environmental performance and impacts, and
However, individually, experts may also use more detailed compare them, leading to comprehensive diagnoses.
sub-categories for deepening particular analyses. It helps to detect and appraise areas of improvement
and leverage points. It facilitates the elaboration
• What are the relevant sub-chains that will sharpen of targeted recommendations (by making clear
the analyses? the consequences for distinct types of actors)
Using relevant technical, economic, geographical, and provides evidence and insights of many kinds
environmental, organisational or social criteria, the team (technical, marketing, managerial, geographical…) to
reviews the actual configuration of the flows of the VC actors and policy makers for conducting appropriate
product. Specific channels assembling some actors at operations and policies.
certain stages often appear due to particular constraints or
Illustration 3. Sub-chains flow chart, example of a rice value chain
50,000 Extensive farmers 10,000 Intensive farmers Paddy rice

100,000 t 80,000 t
Milled rice
30,000 Collectors
80,000 t
Cargo rice
55 Wholesalers
110,000 t
35,000 Artisanal huskers Extensive/artisanal
40 Industrial processors Sub-chain
42,000 t
77,000 t
15,000 Retailers Intensive/industrial
2 Supermarkets Sub-chain
49,000 t 70,000 t
Extensive/industrial
Low income High income Sub-chain
households households
Table 3. Technical processes and practices
COMPONENTS/ USUAL INDICATORS

TYPE OF INFORMATION
ELEMENTS & TOOLS
• Natural and physical environment • Agronomic/aquacultural

• Farm typology
practices, inputs (seeds, chemicals…), water and soil management,
Agricultural • Yields (area, water,
husbandry… • Associated crops • Cropping and fishing seasons
Production labour…)
• Cropped areas • Labour force: quantity, origin • Volume of
production • Prices
Services and • Input supply • Access to and use of counselling and extension
• Typology
agrodealers services • Access to and use of financial services • Prices
Farm • Inventory: type, age, state, condition of use, management

equipment & modalities • Maintenance and rehabilitation needs (and cost) • • Tables, maps
infrastructures Irrigation schemes
• Technical yields
On-farm post- • Stocks, on-farm processing, transport • Product quality • Physical and labour
harvest yields and loss productivity.
• Level of loss
• Typology
• Physical facilities: type, age, state… • Management modalities:
Downstream • Technical yields
ownership, conditions of use... • Management of stocks
processing • Labour productivity
• Physical yields and losses • Prices
• Level of loss
• Typology
• Farmers’ market access • Transport • Types of traders • Physical • Technical
Marketing
facilities: type, age, state… • Ways and means of collection productivity
and trade
Management of stocks • Physical yields and loss • Prices • Production cost
• Level of loss
Regional • Matrix, tables,

• Type (roads, dams...), state • Capacity and needs
infrastructures maps
• In view of preparing for further work, the team • VCA4D studies examine the operations of the VC
must keep in mind that the higher the level of only within the country, even when (part of) the VC
detail (e.g. a detailed typology of the actors), production is exported.
the greater the amount of data needed (on the Systematically applying the same methodological
technological processes, quality of the product, format to all studies, allows for comparisons and
costs, flows, etc.) and the ensuing level of better clarity for national decision makers. It also
resources required (time, logistic support…). makes it possible to remain within the resources
available for the studies (time and cost).
However, when deemed necessary, the experts
may complement the economic and environmental
analyses of the in-country segments of the VC
with a rapid investigation on the foreign segments.
These elements then serve as a complement to
the standard analysis.
Table 4. Organisation and governance
COMPONENTS/ USUAL INDICATORS

TYPE OF INFORMATION
ELEMENTS & TOOLS
• Production/supply area, agents involved, terms of trade, stock • Flow diagram

Marketing
management • Network structure (system nodes, bottlenecks, • Matrix of
networks and
clusters…) • Changes in actors involved (in and out the network) relationships and
distribution
• Information channels and flows on product availability, information flows
channels
accessibility, collection, prices) • Competitors • Maps
• Description
Stakeholders • Relative value of
• Dependence of the agents to the VC activities: economic, access
strategies the various farm
to services and inputs… • Importance of the VC product(s) among
(particularly products
farmers’ crops • Internal decision making (Who? How? ...)
farmers’ strategies) • Risk analysis
matrix
Horizontal • Agents involved in the VC, with their specialisation and size • Matrix of actors’
coordination differentiation • Associations of actors: function, number, volume relationships
between VC agents of flows, internal relations and competition • Conditions for • Diagram of
with the same entry (« barriers ») • Organization and management of strategic information flows
function functions and services (water, labour, stocks…) • VC maps
• Matrix of
• Structure (leverage points…) and competition (monopoly,
Vertical relationships
oligopoly…) • Business environment • ”Contractual” terms: types
coordination • VC maps
of arrangement, conditions, nature of engagement… • Market
between VC agents • Diagram of
supplies over time, seasonal variability, long run demand trend •
in demand-supply information flows
Export: price differential with competitors and final good • Vertical
relationship • Calendar of
coordination
activity
• Regulatory background (permits, authorisations, terms of

• Description
Business use...) • Certification and standard setting • Public service and
• Chronograms,
environment infrastructure provision • Vocational training • Public-private
tables
dialogue
• Description
• Fiscal (taxes, subsidies…) • Financial (credit…) • Trade
Policy framework • Chronograms,
(liberalization, tariffs...) • Territorial (decentralisation…) • ...
tables
• Formal and informal rules (overall and at various VC stages) •

Governance • Description and
Dominant coordination arrangements: market, modular, relational,
system of the VC diagram
captive or hierarchical • Export: international business structure
2.3 A STRATEGIC EXAMINATION OF THE VC helps to grasp a full strategic picture and to explain past
performance and potential development of the VC. The
The analysis of the technical characteristics and organisational SWOT matrix (Illustration 4) is a synthetic tool that helps
features of the VC and of the general environment in which to combine the main findings of the functional analysis
it operates provides the essential elements needed to outline and the drivers stemming from the economic, social and
the VC strategic position. environmental investigations done for answering the
framing questions. Therefore, it can only be completed and
Determining the main Strengths, Weaknesses, fine-tuned in the concluding steps of the VC study.
Opportunities, and Threats (SWOT) regarding the VC
Illustration 4. SWOT analysis matrix, example of a maize value chain
POSITIVE NEGATIVE
STRENGTHS WEAKNESSES
INTERNAL
• Experience • Difficult access to land
S •
•
•
Processors’ know-how
Reputation of products
Flourishing domestic market
W
•
•
•
Physical access to production zones
Low productivity
Low wages in the processing sector
• Coordination and social • Lack of information on prices
capital • Future policy uncertainty
OPPORTUNITIES THREATS
EXTERNAL
• New trends in consumption • Land pressure (reduction of fallow)
O •
•
New actors emergining
Opening of external markets T •
•
Rural insecurity
Rising transport cost
• Policy changes • Decrease of the international price
• Environmental protection standards
• Increasing competition
Functional analysis deliverables
In the team’s conclusive deliverables, the functional analysis must provide a multidisciplinary structured presentation of the
VC including:
• A general description of the products, stages and technical processes;
• The types of actors, their main features and practices;
• The input dealers and support services;
• The flows, their volumes, with a clear view of end-markets considered and geographic distribution;
• The organisation and governance;
• A description of the business environment, policies, institutional and societal context;
• The major market trends;
• An overview of the strategic importance and trends of the VC for the actors and for the country as a whole;
• A SWOT matrix highlighting the main advantages, challenges and shortcomings deriving from all these elements.
In order to quickly check consistency and facilitate reading, the experts are encouraged to use visual presentation tools such
as:
• Matrix of functional relations;
• Resource and utilisation table;
• Matrix of flows and exchanges;
• Flow diagram and mapping (including relevant indicators of volumes, numbers, prices, sales, revenues…), showing
relevant sub-chains;
• SWOT matrix.
03
What is the contribution of
the value chain to economic
growth? (FQ1)
The economic analysis aims at measuring and interpreting the profitability and sustainability of the value chain operations
for all the actors directly involved. Its purpose is to inform on the economic effects of the value chain within the national
economy in terms of growth generation and distribution of incomes. It also assesses its competitiveness and viability
within the global economy (Graph 3).
Graph 3. Overview of the economic analysis
Profitability
Individual actors Sustainability
Effects
Value Value added
Balance of trade
chain Public finance
Sub-chains &
overall value chain
Competitiveness
Viability
The approach is based on robust review and data collection (primary and secondary) and encompasses four steps of computation
dealing with:
1. The extent to which profit level ensures financial sustainability to the VC actors identified in the typology;
2. The overall growth and distributive effects within the national economy;
3. The extent to which the VC operations are competitive and viable in relation with the international economy;
4. How the sub-chains perform differently (profitability for actors, efficiency).
• Precision of data and computation: the economic analysis must not focus too heavily on measuring with an
absolute precision, which requires time for collecting detailed data. Decision makers only use orders of magnitude.
3.1. PROFITABILITY & SUSTAINABILITY FOR Table 5. The Operating Account

ACTORS
EXPENSES REVENUES
This step is often referred to as “financial analysis” with its Intermediate Consumptions (IC) Production
broad sense of analysis of individual businesses (farmer, (Goods and Services used as inputs) .Sales
processor, trader…). It is implemented for every average ... .Home-consumption
individual type of actor as defined in the common typology Value Added (VA) .Change in stocks
(see chapter on functional analysis). .Wages & Salaries*
.Land fee**
The main tool used is the Operating Account (Table 5) .Royalties
built on actual flows for every type of actor. It allows for .Financial charges (interest on loans
the calculation of the actor’s Operating Profit. & insurance premiums)
Subsidies for
.Taxes on operations
operations
--------------------------------------
Flows registered over the period (usually the year) are Operating Profit (OP)***
(Illustration 5):
• the production outputs, i.e. the VC product and possible
*Without valuing unpaid family labour
by-products, and subsidies for operations;
**In case of tenant farming: rent, share-cropping…
• the Intermediate Consumptions (IC), i.e. goods ***Gross OP = Revenues – Expenses
and services used as inputs and totally transformed Net OP = Gross OP - Depreciation
(“consumed”) during the annual production process.
They differ from the investment which corresponds to
the costs incurred for services, materials and equipment Illustration 5. Actors’ operating accounts along a value chain
which are only fully utilised (used up) over several
100
production cycles; IC = Intermediate Consumptions
Monetary units
VA = Value Added
• the cost of external workforce, land fee, royalties, OP = Operating Profits
financial services (i.e. interest on loans and insurance 80
premium), and taxes on operations.
The resulting Gross Operating Profit does not inform 60 IC

on provision for past or future investment. Subtracting
depreciation (i.e. the amount considered to be used up during IC
40
the annual production process) leads to the Net Operating
Profit. It is to be calculated only if depreciation of investment
is relevant (order of magnitude considering the share of 20
IC VA
investment benefiting to VC activities) and available through VA VA

reasonable investigations. OP
OP
OP
0
Farmers Processors Traders
All flows (revenues and expenses) are valued at actual
market price, i.e. at prices used for the transaction, or, when
in kind, at corresponding market prices. Flows that do not Customary account analysis looks over the profitability and
constitute real market exchange are not taken into account sustainability per type of actor. However, in VCA4D studies,
except for the farmers’ home consumption and stocking an actor’s operating account only relates to the activities
annual product. dedicated to the VC production and the calculated profit
applies solely to the actor’s involvement in the VC. Therefore,
• Farmers’ operating accounts, are based on its significance for the actor’s business and strategy as
actual flows: a whole depends on the weight of these activities in the
– Sales (of the VC product) and outlays (expenses actor’s economy. When needed, this relative importance can
for local and imported inputs, workforce, etc.); be approximately assessed considering the proportion of
– Market value of home consumption; resources mobilised (area, working time…) and/or its share
– Subsidies for operations they receive directly; of total income.
– Benefits given in kind to the external workforce
(food, by-products...) are valued at the market Furthermore, a practical way to appraise the profitability and
price of these products; sustainability of the VC for family farmers is to consider the
• No theoretical value of family labour is added working time spent (when it can be estimated) by comparing
to the costs (i.e. no opportunity cost nor shadow the farmer’s operating profit to the official minimum wage,
pricing) so that the resulting operating profit to the salary provided by plausible alternative employment
measures the actual return to the farm, informing opportunities, or to a minimum acceptable living income.
on the exact remuneration of the family labour,
i.e. its income.
The CARD tool • In the VC consolidated operating account:

to anticipate climate change impact – The final VC production is valued at the price of
final consumption in the domestic market and
Evaluating financial sustainability of farms involves at FOB gate price for the exports;
questioning their capacity to face climate change – The consolidated Value Added (VA) is the sum
consequences. The Climate Adaptation in Rural of the VA of all the direct actors (at all steps
Development assessment tool (CARD) developed by of the VC);
IFAD enables easy access to crop yield projections – The consolidated Intermediate Consumptions
for 17 major annual crops in 54 African countries (IC) add up only the goods and services supplied
up to 2050. For every crop, this simple tool allows to to the direct VC actors by agents outside of the
select the regions or agroecological zones, rainfed or VC. (NB: therefore, the VC product channelled
irrigated cropping, and three levels of risk. Testing the along the chain does not appear as an IC in the
operating account with these yield projections allows consolidated account).
us to get a sense of the impact of climate change on
the farmers’ position in the future.
CARD is based on the IPCC modelling RCP8.5 Computing Total Effects
scenario which projects the highest concentration in
greenhouse gas and global warming. The sum of the VA generated by all the actors operating
The CARD Microsoft Excel file can be downloaded from within the VC limits (i.e. actors producing, processing or
https://www.ifad.org/en/web/knowledge/publication/ channelling the VC product) is called Direct VA, while the
asset/41085709 sum of the VA generated by all the suppliers external to the
VC (i.e. actors providing intermediate goods and services to
the VC actors, therefore not handling nor processing the VC
3.2 TOTAL EFFECTS WITHIN THE NATIONAL products) is called Indirect VA. Total Value Added adds up
ECONOMY these direct and indirect components, revealing the overall
generation of VA entailed by the VC (Graph 4).
Consolidating the VC accounts
The operating accounts of all the VC actors (per types) are Total Direct VA Indirect VA
consolidated into one single operating account encompassing = +
VA (VC actors) (suppliers external to the VC)
all the flows generated by the VC operations, in order to assess
the VC impact both on the VC actors together and on the
remainder of the economy.
Similarly, every constituent of the VA, i.e. salaries and wages,
land fees, royalties, financial charges (interest on loans),
taxes on operations, and operating profits, is made of a direct
(VC actors) and an indirect (domestic IC suppliers) parts.
NB: Subsidies for operations granted to VC actors are added

separately. They increase the profits of the VC actors but
are not part of the Total VA which measures the additional
wealth created by the VC. From the accounting viewpoint, the
balance of the consolidated VC account is thus equal to the
sum of the VC actors’ operating profits minus the subsidies
© Shutterstock
for operations they receive directly.
Table 6. Core Questions and Indicators for the financial analysis of actors
Framing Question 1: What is the contribution of the VC to economic growth?

(Particular attention must be paid to the calculations of the indicators in bold)
How profitable and sustainable are the VC activities for the actors involved?
Indicators: Operating Accounts of every type of actor; Net Operating Profit; Return on turnover (operating
CQ1.1 profit/production); Current Benefit/Cost ratio (operating profit /total expenses); Estimates of Return on Investment
(if relevant and available); Benchmarks for farmers’ net income (minimum wage, livelihood needs, job
opportunities…).
Imports of IC by the actors within the limits of the VC are by agents external to the VC. They are calculated by using
called Direct Imports while imports incorporated in the suppliers’ accounts, or national statistics when easily
intermediate goods and services supplied by the agents available.
external to the VC are called Indirect Imports.
Total Direct imports Indirect imports • Computing Indirect Value Added and Indirect
imports = (VC actors) + (suppliers external to Imports is only required for the very few
the VC) intermediate consumptions that amount to a
substantial share of the total production value.
Indirect Value Added and Indirect Imports result from Only those sizeable IC significantly alter the
“backward linkages” which are the activities entailed by the order of magnitude of the Total VA and Total
supply of intermediate goods and services to the VC actors Imports.
Graph 4. Computing Direct, Indirect and Total Value Added and Imports
Consolidated Direct Indirect Total
Direct
imports Total
imports
Indirect
imports
Domestic
Intermediate
Consumptions VA
Value of the Suppliers
production* (Indirect VA)
Total
VA
VA
VC actors
(Direct VA)
* Not including subsidies for operations granted to actors
Analysing the Total Effects The Rate of Integration indicates the portion of the value
of the VC production which at this stage remains within the
a) Contribution to growth domestic economy.
Growth is usually estimated by the Gross Domestic Product Rate of Total VA

(GDP), which is the sum of the Value Added created by all the =
integration Production of the VC
domestic agents. The Direct VA measures the contribution
of VC actors to growth and the Indirect VA the contribution
of the domestic IC suppliers to growth. Total Value Added This ratio estimates the extent to which VC actors draw on
measures the overall contribution to national growth domestic productive capacities of intermediate goods and
entailed by the VC operations. services. This driving capacity is a key development process
as it strengthens domestic activity and economic growth.
More specifically, the Direct VA created by the VC agricultural
actors contributes to the agriculture sector growth. Its Combined with an analysis of the market dynamics and local
share of the Agriculture GDP informs on the weight of the VC production potential of ICs, the Driving Effect Ratio informs
in this sector. on the involvement of domestic business in supporting the
activities of the VC.
b) Driving effect within the domestic economy
Driving effect Indirect VA
Total VA also informs on the level of integration within =
Ratio Direct VA
the domestic economy of the activities generated and
induced by the VC.
c) Income distribution Domestic products somehow compete with those available

in the international market. International competitiveness is
In practice, Value Added consists of incomes distributed to assessed with the Nominal Protection Coefficient (NPC)
• Households: salaries, wages, operating profits (including which compares the national and international prices of
subsidies to operations) of family businesses, rents; every VC product.
• Financial institutions: interest on loans and insurance;
• Public entities: taxes, operating profit of public companies; Domestic price of the product
• Enterprises: operating profits. NPC =
International parity price of
the product
Therefore, reviewing Total Value Added and taking due account
(Parity price: see box on p.21)
of the subsidies for operations granted to VC actors shed
light on the impact of the VC on the overall distribution of A NPC > 1 means that the domestic value is higher than the
incomes to agents. This will be more thoroughly analysed international market price. Thus, the overall VC remuneration
to answer the Framing Question 2 on inclusiveness. is higher than it would be if applying international parity
prices. In some ways the domestic market is protected, and
The public funds balance is reckoned using the formula: the VC product is not competitive with similar international
products.
Receipts
outlay An indication of the overall economic gain or loss for the
[Total taxes
Impact on [Subsidies national economy is given by the Domestic Resource Cost
= + Total OP -
Public funds + other public ratio (DRC). The DRC compares:
of public
expenditure] • the actual internal cost for the economy given by the
companies]
actual remuneration of the domestic non-tradeable
d) Balance of trade factors (e.g. labour, capital, land, environmental goods)
mobilised in the VC, and
Importing IC denotes loosing foreign currency for the national • the net value created within the economy: estimated
economy while VC exports (if any) bring foreign currency using international parity prices (of IC and production),
gains. Matching both allows to assess the Balance of Trade i.e. from the opportunity standpoint of international
of the VC : markets.
Impact on Balance The DRC measures the value of domestic factors necessary
= VC exports - Total imports
of Trade to gain one foreign currency unit.
3.3 COMPETITIVENESS AND VIABILITY WITHIN Non tradeable domestic factors

THE INTERNATIONAL ECONOMY at market price (exluding transfers)
DRC
Tradeable
Countries are part of the worldwide economy, and as such, the Production intermediate
viability of the VC in the global economy must be assessed. -
at international price goods and services
at international prices
Table 7. Core Questions and Indicators for the analysis of the Total Effects

What is the contribution of the VC to the GDP?

Indicators: Value of final VC production; Consolidated operating accounts of the whole VC and relevant sub-chains;
CQ1.2
Total Value Added and components (Wages, Taxes, Financial Charges, Operating Profits); Total Value Added in
percentage of the GDP; Rate of Integration into the Economy; Driving effect ratio.
What is the contribution of the VC to the agriculture sector GDP?

CQ1.3
Indicators: VC agricultural actors’ Value Added in percentage of the agriculture sector GDP.
What is the contribution of the VC to the public finances?
CQ1.4 Indicators: Taxes, subsidies and operating profits of public enterprises; other receipts and outlays of the government
budget; Public Funds Balance.
What is the contribution of the VC to the balance of trade?
CQ1.5 Indicators: VC Exports; VC Total Imports; Balance of trade of the VC; Return on Foreign Currency outlays (FC net
balance/FC outlays); Total Imports/VC Production).
By comparing internal cost and potential external gain the 3.4. COMPARING SUB-CHAINS
DRC raises the issue of the sustainability of the VC. A DRC < 1
means that the VC is viable in the global economy because The economic analysis gathers evidence on how sub-chains
the value of domestic factors which are consumed is lower perform differently.
than the value they produce (from the standpoint of the
international markets and considering the present level of Indicators of profitability, direct value added generation,
remuneration of domestic factors). income distribution or employment are estimated for every
sub-chain as a whole and at different stages. They can also
be broken down according to farm types, or related to one
• To keep clear and comparable results among VC unit of product (kg, ton, functional unit…) or area (ha…) thus
studies, the computational process for DRC is: informing on varied aspects of the sub-chains performance.
i. to eliminate “transfers”, i.e. taxes, subsidies, land
fees and financial flows; Gaps revealed by these indicators point to relative
ii. to value tradeable goods and services using advantages and drawbacks anchored in the technical, social
international parity prices; and economic grounds of every sub-chain (Illustration 6).
iii. to use actual domestic market prices for all They allow appropriate recommendations to be drawn up.
other flows. No shadow pricing is to be applied
on items such as wages, land and exchange rate. NB: The detailed performance of every sub-chain regarding
income distribution to different types of actors is carefully
examined when tackling Framing Question 2 on inclusiveness.
• All international prices used are parity prices, i.e.
the value of the same product imported from Illustration 6. Comparing the price structure of sub-chains,
international markets or exported to international example of a pineapple value chain
markets: 1400
– Import Parity Price = Border price + Internal
domestic cost for delivery; 1200 450
Prices Monetary Unit for 1 kg
300
200
– Export Parity Price = International price - Cost 1000 10
of delivery to the international place (for which 100
100
150
price is set). 800 200
500 300
600 200
Software for the economic analysis 400 200
550
200 400
The economic calculations can be done using 300
spreadsheets or an existing software such as AgriFood 0

Extensive Rural Semi- extensive Intensive
Chain Analysis (AFA, developed by Cirad). Sub-Chain Sub-Chain Sub-Chain
The AFA software facilitates the systematic Operating Profit Wages Financial charges Taxes IC
organisation of physical and economic data. It ensures
• Intensive Urban Sub-Chain has elevated costs due to strong
coherence, e.g. to ascertain that physical supplies
fertilizer use and high financial charge.The resulting quality
and utilisations are balanced or that prices used
allows a high price (1400) on urban and international
are consistent. It automatically calculates indicators
markets. Impact on public finance is positive but with
(financial profitability for the actors, direct value added
an important loss in foreign currency due to imported
at sub-chains and whole chain levels, total effects,
fertilizers and package (350 out of the 450 IC cost).
sustainability within the international economy). It can
• Semi-Intensive Sub-Chain has a lower cost of imported
easily test different sets of prices, make sensitivity
inputs and generates the highest operating profit for 1 kg
analysis, and facilitate comparisons and simulations.
of pineapple.
This software also operates as an information system
• Extensive Rural Sub-Chain generates incomes to
to store data. It requires an initial training for using it.
smallholder farmers and wage-earning jobs.
Table 8. Core Question and Indicators for the analysis of competitiveness

Is the VC viable in the international economy?

CQ1.6 Indicators: Nominal Protection Coefficient (NPC); Effective Protection Coefficient (EPC); Domestic Resource
Cost Ratio (DRC); Share of the export price (FOB) in the final consumer price in the importing country.
04
Is this economic growth
inclusive? (FQ2)
To build an image of the inclusiveness of the value chain, the economic and social experts highlight how the VC organisation
and governance involve the various stakeholders and how the incomes and employment generated are distributed among
social groups. The value chain specific impact on vulnerable groups such as subsistence-oriented farmers, smallholders, women,
youth, and marginalised people (landless rural workers, minority communities…) is closely documented (Graph 5).
Graph 5: Overview of the analysis of inclusiveness
INCOMES
ORGANISATION
& INCLUSIVENESS EMPLOYMENT
GOVERNANCE
SOCIAL BENEFITS
Sub-chains may have mixed outcomes on inclusiveness. Inasmuch as significant differences are evidenced, conclusion and
recommendations will gain in relevance and precision.
4.1 PARTICIPATION IN THE VALUE CHAIN in decisions is a key determinant of inclusiveness (Graph 6)
GOVERNANCE as decisions are made at each step of the VC, leading to
unequal influence in steering the VC and taking advantage
The way the stakeholders along the value chain are involved from its activities.
Graph 6: Main elements of the analysis of governance
Community
Territorial authorities
Local organisations
VC GOVERNANCE
INDIVIDUALS
Structure
Associations
&
Farmers, Producers
Cooperatives, Unions... Mechanisms
BUSINESSES
Decisions
Clusters
Alliances
BUSINESS
ENVIRONMENT
Laws, Regulations,
Infrastructures,
Public services...
Information on these issues stem mainly from: • The power of producers’ organisations, the
transparency of information and the confidence between
• reviewing the horizontal and vertical coordination, actors play a key role in setting the price;
the rules and arrangements in place and the access to • Market networks and firms’ integration regulate
information (Table 4); negotiations on the working conditions and price
• investigating on the social capital, particularly on bargaining;
the various associations (farmers and producers’ • Involvement of women or vulnerable people in
organisations, business alliances, workers’ unions…), decision-making processes may influence the income
the power relations (including local authorities), the distribution among actors;
community involvement, and the level of trust (see Social • Assets and access to resources determine the
Profile, chapter 5). capacity to get a decent return on labour;
• Training and compliance (and valid registration) to
The ensuing global picture allows for the identification of certification schemes may lead to increased revenues.
the processes that strengthen or limit the enforcement of
rules (on land, working conditions, etc.) and the stakeholders’
bargaining position (through contracts, organisations, policy
measures and regulations, taxes or subsidies). Altogether,
analysing the governance mechanisms and social relations
points at major favourable or negative drivers (Illustration 7):
© Shutterstock
Illustration 7: Involvement in sub-chains, example of a fresh beans for export value chain
Smallholders in open market Smallholders with contract

Individuals scattered in remote areas Members of formal and informal groups
Participation in collective governance

• No coordination: sales to brokers and middlemen (without • Contract provides close ties with export companies (including
direct contact with export companies) certification and support for management)
• Sales negotiated on spot with brokers and middlemen. No • Early agreement on prices, collection times and produce quality
organisation to build social capital • Membership in various formal and informal groups
Access to Services
• Few extension services and no targeted counselling • Contractual extension services on production and management
• Limited training (from brokers) on agronomic and food safety practices and training on new market compliance requirements
practices • Support for credit facilities and funding for a collection and
grading house
Indicators
• Yield around 6 t/ha • Yield around 10 t/ha
• Reduced farm gate price
• Operating Profit ~6400 MU/1000 sqm² • Operating Profit ~ 30,000 MU/1000 sqm²
• Loosing market shares over time • Sustained market share
4.2 INCOME AND EMPLOYMENT
Income distribution and employment creation are tangible indicators of how households and businesses take advantage of the
VC operations (Graph 7).
Graph 7: Main elements of the analysis of income and employment
Vulnerable
people
Social benefits Farmers Smallholders
(from businesses) (Profitability & Sustainability)
INDIVIDUALS Women
Farm labourers
(Income & jobs)
(Living wage)
Youth
Employees
(Living salary) Poor
Income Marginalised
distribution Micro-Small Medium
(from Total VA) Enterprises ...
BUSINESSES (Profitability & Sustainability)
(Operating profits) Urban-Rural
Big enterprises
(Profitability & Sustainability)
...
Inclusiveness is evidenced by various indicators of revenue Illustration 9: Share of the farm gate price in the FOB price
distribution (Illustration 8): example of a cocoa value chain
• depicting some processes at work: 100

– i.e. Level of farm gate price;
– Share of the farm gate price in the final price,
i.e domestic consumer price or FOB export price, in the 80
case of export and if possible in the final consumer
price abroad (Illustration 9);
– Value of social benefits of all kinds bestowed by 60
VC operators (plantations, cooperatives, firms…) to
farmers and workers.
40
• measuring the level of actual benefits:
– Farm income i.e. farmers’ operating profit. Income
20
of smallholders and larger farms should possibly be
distinguished. NB: at the farm level, wages that the
family workforce earn on other farms for VC operations 0
increase the global income; Farm gate price FOB price
– Total wages of farm seasonal labourers;
– Total salaries and Total operating profits (including
direct subsidies) of individual businesses, of Micro,
Small and Medium Enterprises (MSMEs) and of larger
companies directly involved in the VC downstream • National VCs that export commodities are part
(processing, marketing, financial services if relevant…) of larger international value chains with final
and upstream (IC suppliers) enterprises. consumption abroad. The exported VC product
can be processed abroad. When this commodity
is the major component of the final consumer
good (as in the case of tea, coffee, cocoa,
Illustration 8. Distribution of income, cotton for garment, “ethnic” merchandise,
example of an egg value chain etc.), a rough estimate of the share of the
farm gate price (or FOB export price) in the
Feedstock producers’
final consumer’s price gives an indication of
operating profit how the value is distributed along the chain.
3% It draws attention to the negotiating power of
Other suppliers/service
DOC*/Point of lay providers’ operating profit the national VC. It also gives a hint on the stake
producers’ operating profit 4%
2%
of developing downstream domestic activities
Small-scale egg
producers’ operating (processing or trading). A specific study may be
profit recommended when deemed necessary.
Taxes on 3%
Financial operations Medium-scale egg
charges 10% producers’
7%
operating profit
5%
Wages and salaries

15%
Large-scale egg producers

operating profit
51%
*DOC - Day old chicks
© Shutterstock
• Beyond the outright income measurement of Data can be collected from specific survey or secondary
farmers and MSMEs based on their Operating documents (databases, statistics…). Rapid suitable
Profit, the precariousness of their situation computation provides an approximate number of FTE.
is assessed in the analysis of their financial
sustainability, including the possible impact of Moreover, assessing inclusiveness requires as far as possible
Climate Change (see box on the CARD tool in to detail skilled and unskilled jobs and to what extent they
chapter 3). benefit women, young people, urban or rural people, migrants,
etc.
Indicators measuring jobs and self-employment are

expressed by the number of people involved and Full-Time • When used for the economic analysis, the software
Equivalents (FTE). Jobs are generated at all the stages of the AFA calculates the distribution of incomes and
VC and by the ICs suppliers (backward linkages) (Illustrations provides support for reckoning the jobs.
10 and 11). They include:
• Full time and part-time occupation within farm

households and family businesses along the chain • Portraying income, employment and social
(family workforce and seasonal labourers); benefits of small-holders, women, youth or
• Employees of formal sector enterprises upstream specific marginalised groups helps to put
and downstream, and public services. things into perspective (balancing benefits and
shortcomings, taking trade-offs into account…).
For instance, a VC with a high female labourers
participation may in fact be unfavourable to
women if they are underpaid.
Illustration 10. Impact on employment and inclusiveness,

example of an egg value chain
Production. Large-scale egg production offers limited peri-urban employment (150,000 FTE). These opportunities are particularly limited
when considering women and youth with low levels of education as they need increasingly high skills. Layer feed price instability
disfavours medium/ small-scale producers (respectively 10,000 and 300,000 producers) as they have little access to business advisory
and affordable finance services.
Dowstream VC activities. Table egg distribution is more inclusive than production, creating employment particularly for male youth.
Income is spread among 600 “wholesalers” and a highly profitable 18,500 micro-retailers in urban and peri-urban areas.
Upstream VC activities. Soya is the major input for egg production. Its cultivation has attracted annually 20% more smallholder
farmers of both genders and provided opportunities for seasonal employment in rural areas (300,000 FTE).
© Shutterstock
Illustration 11. Comparing employment in sub-chains, example of an aquaculture value chain
Pond farmers to urban

consumers
Strong job creation in farming and trading
Sub-chains
Cage farmers to urban

consumers
Generation of jobs at all stages and for all types of farmers
Pond farmers to rural

consumers
Very strong generation of jobs, mainly for small farmers
0 1000 2000 3000 4000 5000 6000 7000

Number of jobs
Small farmers Large farmers Wholesalers Processors Retailers
© Shutterstock
Table 9. Core Questions and Indicators for the analysis of inclusiveness
Framing Question 2: Is this economic growth inclusive?

How is income distributed across actors of the VC?
Indicators: Disaggregated Value Added; Total Farm Income; Total wages and salaries (at every stage,
CQ2.1
all activities – absolute and %); Value of social benefits; Comparison of sub-chains’ income distribution; Total
income accruing to marginalized and vulnerable groups.
What is the impact of the governance systems on income distribution?
CQ2.2 Indicators: Income distribution among actors; Share of farm gate price in the final price (%); Income
Gini Index.
How is employment distributed across the VC?
CQ2.3 Indicators: Number of jobs (family, self- and formal employment) at different VC stages (permanent/
temporary, skilled/unskilled…); Employment of women; Employment of marginalized and vulnerable groups.
05
Is the value chain socially
sustainable? (FQ3)
The analysis of social sustainability focuses on assessing established and potential consequences of the VC operations in an
array of six domains of importance for decision makers because they convey key concerns of development: Working Conditions,
Land and Water Rights, Gender Equality, Food and Nutrition Security, Social Capital, and Living Conditions. To capture
this impact, it is necessary to understand how the societal context sets the conditions of the VC operations through the cultural
and regulatory organisation and existing physical means (infrastructures, facilities…) (Graph 8).
Graph 8: Overview of social analysis and employment
SOCIETAL Benefits
Working Conditions Disadvantages
CONTEXT
Land & Water Rights
Gender Equality
Food and Nutrition Security
Social Capital Sustainability
VALUE CHAIN Living Conditions
OPERATIONS
5.1 SIX KEY DOMAINS TO INVESTIGATE VC operations or from the context. This can sometimes be
clarified by comparing with another situation where the farm,
Social sustainability can be examined by looking at people’s the business or the zone is not involved in the VC activities. As
lives and livelihoods through many different lenses. The a matter of fact, situations are typically complex, especially
proposed framework captures the main outcomes of VC when actors are engaged in several VCs. In any case, the
activities through six Core Questions referring to six social experts have to incorporate the VCA4D Social Profile
“domains”. Every domain assembles several themes (Tables and its questions within their own working practices in order
10 and 11); these “sub-domains” can be seen as the building to assess these six domains.
blocks of the social analysis.
The analysis should inform on how the interaction between
For every sub-domain, a list of questions helps guide the VC actors and the general environment contributes to
the analytical process. The list is part of the Social Profile improving or degrading the situation of the various
tool (see below). These questions reflect development social groups and types of actors (e.g. concerning access
concerns that may apply when appraising VC operations. to facilities, social capital, equality…).
They ensure that no important wide-ranging concern is
left aside. They target particular social impacts of the VC • Whenever relevant, the common typology agreed
activities. upon (see Functional Analysis) should serve as a
reference for organising the investigative work
In order to appraise the actual impact of the VC activities, and for presenting conclusions. Nevertheless,
the interactions between the actors of the VC and some types of actors may be disaggregated
the general environment must be understood. It is or aggregated if appropriate, particularly for
often a tricky, and sometimes sensitive, issue to discern the benchmarking.
main factors at work and whether the outcomes arise from
Table 10. Domains and thematic sub-domains for the social analysis
1. WORKING CONDITIONS 4. FOOD & NUTRITION SECURITY

1.1 Respect of labour rights 4.1 Availability of food
1.2 Child labour 4.2 Accessibility of food
1.3 Job safety 4.3 Utilisation and nutritional adequacy
1.4 Attractiveness 4.4 Stability
2. LAND & WATER RIGHTS 5. SOCIAL CAPITAL
2.1 Adherence to VGGT* 5.1 Strength of producer organisations
2.2 Transparency, participation and consultation 5.2 Information and confidence
2.3 Equity, compensation and justice 5.3 Social involvement
3. GENDER EQUALITY 6. LIVING CONDITIONS
3.1 Economic activities 6.1 Health services
3.2 Access to resources and services 6.2 Housing
3.3 Decision making 6.3 Education and training
3.4 Leadership and empowerment
3.5 Hardship and division of labour
*VGGT = Voluntary Guidelines on the responsible Governance of Tenure land, fisheries and forests
Eventually, the team’s expertise is called to outline and 5.2 USING THE SOCIAL PROFILE
appraise the key benefits and disadvantages and the
social sustainability of the VC operations. The background The Social Profile tool assists the expert in reflecting on
of their judgement is based on the actual national situation important issues to elaborate his/her understanding of the
and strategies and on the widely shared international situation.
development standards (such as the guidelines on land
tenure or SDGs).
The Social Profile tool
Investigation is fed by common data collection tools
(statistics, surveys, focus groups, interviews, secondary The Social Profile is a tool built by INTPA on a
sources…). In some cases, conclusions may point to areas spreadsheet. It includes a series of straightforward
requiring more information or in-depth study. questions for each of the 6 domains to help the data
collection and the analysis of the situation. This tool is
provided to the social expert.
The Social Profile is based on a process of simple scoring

• Health hazards. The social expert must inquire that facilitates the expert’s judgement. It produces a
about the working conditions in the VC, which graphic representation in the form of a “Radar chart”
encompass job safety and the exposure of which sums up the diversity of information and scores
children to unsafe practices. As the environmental in order to enhance the communication towards
expert is also in charge of looking after the overall decision makers. Moreover, it showcases clearly the
potential damage of the VC on human health, they evolution when a new study of the same VC is done.
both share the responsibility of detecting health
risks through their visits and data collection
(interviews, surveys, secondary documents…).
Adverse exposure may happen at all steps of the
VC, but frequently in some agricultural activities The series of questions provides a guideline (Graph 9). It
(chemical use with poor body protection…) or is meant to help the analytical process, not to limit the
processing facilities (insane atmosphere, harmful investigation to one-off answers. It aims at supporting the
manoeuvres…). The social and environmental expert in collecting relevant information, and pointing out
experts thus present their findings together when critical points to clarify and take into account in the overall
tackling the “Working Conditions” domain of the social analysis.
Social Profile and the Human Health damage
section of the FQ on environmental sustainability.
Graph 9. Applying the Social Profile: brief example of the process
Surveys
Questions Sub-domains Domains
Interviews 2.1.1 Do the 2.1 Adherence to Working Conditions
companies/ VGGT
Land and Water Rights
Focus groups instititions 2.2 Transparency,
involved in the participation and Gender Equality 0
Secondary data VC declare ad- consultation

Food and Nutrition Security
hering to the 2.3 Equality,
Social Capital
VGGT? compensation and
Statistics
...? justice Living Conditions
... Scoring
High/Substantial/Low
Not at all
The scoring of questions intends to facilitate the expert’s On the whole, the expert’s work encompasses four areas:
abridged judgement and to deliver a synthetic graph that
shows the diversity of perspectives (Illustration 12). The • Addressing the questions of the Social Profile.
simple scoring scale is made of four levels of outcome: from Depending on the setting, some questions might not
a “High” to a “Substantial”, “Low” or “Not at all” positive be relevant and can be overlooked, while the social
situation. expert may emphasize other decisive ones.
• Collecting data and information. The expert uses
In practice, to select the score, the social expert uses her/ the sources and apply the methods s/he considers
his judgement from different perspectives: appropriate.
• Appraising how the VC activities contribute to changing • Scoring the questions in order to weigh up the
the observed background situation and their influence on judgement and build a global picture with the Social
the VC actors; Profile Radar Chart.
• Using different sets of reference: • Summarising the findings per domains and
– in relative terms by comparing with other activities altogether, to deliver a comprehensive and
in the country (other VCs or sectors), e.g. consistency explanatory presentation of the social benefits and
with national social conditions; sustainability.
– in absolute terms, e.g. for estimating the level of food
security or access to services;
– benchmarking with international norms, e.g. ILO • The report should broadly review every domain
labour conventions or VGGT. rather than lengthily answer every question. In
each domain it should emphasize the critical
points that require attention.
© Shutterstock
Illustration 12. The Social Profile radar, example of a mango value chain
Uneven. Better for export sub-chain
Positive for schooling and

housing improvement Precarious traditional system
Low level of organisation, Increase of women’s revenue

especially for export improve their status
Strong positive impact
High Substantial Moderate/low Not at all
Table 11. Core Questions and main Themes for the social analysis
Framing Question 3: Is the VC socially sustainable?

Are working conditions throughout the VC socially acceptable and sustainable? Do VC operations
contribute to improving them?
CQ3.1
Main themes: Respect of international norms; Respect of contracts; Risk of discrimination and forced labour; Job
Safety; Attractiveness; Child labour and education…
Are the land and water rights implemented throughout the VC socially acceptable and sustainable?
CQ3.2 Main themes: Adherence to and application of VGGT; Equity and security of access to land/water resources;
Transparency of procedures; Consultation; Arbitration procedures; Compensation procedures…
Throughout the VC, do actors foster and put into practice gender equality?
Main themes: Inclusion/Exclusion of women/vulnerable groups in certain activities; Access to resources, goods and
CQ3.3
services (land, credit, extension services, inputs…); Participation in decision-making (on activities, organisation,
income…); Responsibility and empowerment in collective processes; Arduous working conditions…
Do VC activities contribute to upgrading and securing the food and nutrition conditions?
CQ3.4 Main themes: Contribution of the VC to the availability, accessibility and stability of food resources; Food
diversification; Nutritional quality; Price instability…
Is social capital enhanced by VC operations and equitably distributed throughout the VC?
CQ3.5 Main themes: Strength and representativeness of producers’ organisations; Information sharing; Level of trust
among actors; Participation in decisions and community activities; taking traditional practices into account…
Do the VC activities contribute to improving the living conditions of the households through
acceptable facilities and services?
CQ3.6
Main themes: Access to facilities and services: health, education, training, housing, water and sanitation; Quality of
these infrastructures…
06
Is the value chain
environmentally sustainable?
(FQ4)
To answer this question, the environmental expert takes stock of the damages the operations of the VC entail on Resource
depletion, Ecosystem quality and Human health, and of their contribution to Climate Change, while paying attention to
the risks on Biodiversity. By combining data and findings on these various areas of concern s/he draws up a quantitative and
qualitative appraisal of the environmental sustainability of the value chain.
The approach to evaluate the environmental sustainability of the value chain is twofold, based on the quantitative Life Cycle
Assessment (LCA) accompanied by an exploratory assessment of biodiversity risks (Graph 10).
Graph 10. Overview of the environmental analysis
DATA COLLECTION APPROACH DAMAGES
NATURAL RESOURCES
= Depletion
Life Cycle Assessment
VALUE CHAIN
Activities ECOSYSTEM QUALITY

= Degradation
HUMAN HEALTH
= Deterioration
CLIMATE CHANGE
CONTEXT
= Global warming
assessment
Exploratory
Landscape
BIODIVERSITY
Interventions Risks = Loss
6.1 RESOURCES, ECOSYSTEM, HEALTH • Interpretation and analysis of environmental impacts

and damages at midpoint and endpoint levels;
The Life Cycle Assessment methodology • Conclusion on how the areas of protection are affected
and identification of critical points (hotspots);
On the whole, LCA inventories the material and energy • Possibly, analysis of variability (with sensitivity analysis
flows used, produced or released by the activities of the or probabilistic methods such as the Monte-Carlo method
VC. Along the VC, the substances emitted or consumed to to explore uncertainty).
crop, manufacture, process, transport, and market all the
products are recorded and measured. According to their
physical, chemical and biological nature, they activate cause- • The analysis provides information on the
and-effect chains that induce changes in the environment. environmental impacts and damages due to
These changes cause (or, on the contrary, counteract) specific activities inside the country. In case the experts
environmental problems such as terrestrial acidification, investigate also activities beyond the national
freshwater deprivation or ecotoxicity. LCA measures these border, the results regarding the domestic
effects (negative or positive) using physical, chemical or activities must be presented separately.
biological indicators, and it refers to them as “impacts”.
Current LCA applications take around twenty major impact
categories (the “midpoints” level) into account in the existing
scientific models. In turn, the consequences of these impacts
on Natural Resources, Ecosystem Quality and Human LCA software for environmental analysis
Health are identified (Tables 12 and 13), and referred to as
“damages”. These 3 domains of environmental concerns Life Cycle Assessment is done by using specific
are named “areas of protection” (the “endpoints” level). software. The SimaPro software appears to be both
convenient and largely shared among the community
The upper level reference for the LCA method is established of LCA analysts in the tropical agriculture sector. It has
by two ISO norms (ISO 14040:2006 and ISO 14044:2006). thus been selected for use by the VCA4D teams but
To link impact categories (midpoints) to damage realms other software may be utilised if compatible with the
(endpoints), the ReCiPe2016 method is often applied. information system that will store data and results in a
standardised way for future reference and comparison.
Main steps of a LCA are:
• Selection of the functional unit(s) to be used, i.e. the

reference unit serving as a basis for all calculations. It
may arise from the product (usually in volume or weight,
e.g. liter or kg) or the land area (e.g. ha);
• Inventory of resources used and of emissions produced
during the VC operations;
• Data management and processing using “characterisation
factors” issued from scientific international databases
and impact assessment models;
© Shutterstock
Table 12. Domains of environmental concerns: three areas of protection
Damages* to Aim at capturing Usual indicator **

Depletion of resources: Increased cost to continue extractions
Natural • Non-renewable: exhaustion of stocks
Resources • Renewable: rate of use higher than replacement Unit= US $
Impairement in the functions and structure of natural Potentially Disappeared Fraction of species
Ecosystem ecosystems through a variety of damages to all kinds (PDF) during one year
Quality of local wildlife species leading to loss integrated over
time Unit = species.yr
Negative effects on: Disability Adjusted Loss of Life Years (DALY)
Human • quality of life (morbidity)
Health
• life expectancy (mortality) Unit = DALY***
* If the situation improves, the upgrading is measured with negative damage indicators.
** These indicators are proxy variables reckoned by using the latest specific research models of damage pathways (as in the ReCiPe2016 methodology).
*** Reduction of the potential number of healthy life years due to premature morbidity or mortality.
Graph 11. Broad outline of the steps of the LCA
Stages Inventory Impact Damages

Emitted substances Categories Pathways on areas of protection
of the VC & Resources used (Midpoints) to damages (Endpoints)
Export Particulate matter Increased extraction costs

CH4
Tropospheric ozone formation
... Natural
Consumption C02 Oil/gas/coal energy cost
Human toxicity
Resources
Retail Pesticides ... Damages to freshwater species
Global warming
Wholesale ...
Water use Damages to territorial species
Processing Energy ... Ecosystem
Freshwater ecotoxicity Damages to marine species Quality
Aggregation ... ...
Terrestrial ecotoxicity Increase in respiratory diseases
Collection Heavy metals ...
Land use / transformation Increase in various types of cancer
Agricultural Water Marine ecotoxicity Human
production ... Increase in other diseases/causes Health
...
Forest resources
Input supply ... ... Increase in malnutrition
Physical processes Characterisation factors Damages factors & models

+ Analysis + Interpretation
Inquiring on specific hazards Presenting the results
Whenever appropriate, LCA may be supplemented for any of Presenting results in an understandable way is as important
the three areas of protection, by empirical in situ observations as conducting the investigations. Analysing the sources of
and examination of the consequences of practices at any damage (so-called “contribution analysis”) is key intelligence
stage of the VC. for actors and decision makers. It allows for the identification
of the activities that have the strongest influence, thus where
In practice, it is on Human Health that several risks are more progress should primarily be sought and to pinpoint the sub-
likely to exist and remain unveiled. Two VC steps deserve chains and actors to focus on.
more careful attention:
LCA resorts to scientific modelling in different fields and its
• agriculture: the way chemicals are used in the field is a results cannot be easily taken in absolute terms. They are
customary example of practices that may have a strong used for ranking and comparing the intensity of damage
impact on health of the workers and country-dwellers entailed by the VC steps, the sub-chains and the whole VC
whereas utilisation of body protections and enforcement operations for a given functional unit. Analysis should focus
of safety rules during treatments are not always strictly on activities generating the highest consequences.
followed. These occurrences may be ignored even with
the sole systematic recording of quantity of chemicals Results are usually displayed in proportion (%) of the
sprayed; worst situation so as to highlight disparities. Thus, they
• processing: many tasks require the use of hazardous do not inform directly on the magnitude of the damage
products or expose to harmful conditions, e.g. confinement produced nor compare it between areas of protection. So,
in stuffy premises. for instance, damage on Human Health may be very low
while damage on Resources is high. Whenever possible, a
practical description of the main potential consequences (on
• Both the environmental and social experts share Resources, Ecosystems and Human Health) should provide a
the responsibility of detecting risks to health sense of the importance of the damages.
through visits and data collection (interviews,
surveys, secondary documents…). The former
collects information on practices as much as • LCA reports presents standard graphics that require
on molecules and quantities used. The latter explanation to non-specialists. The meaning of
inquires on the working conditions (Social Profile, significant indicators and the consequences on the
see Chapter 5) which include job safety, the three areas of protection must always be clearly
workers’ protection and particularly the exposure stated with simple words with a view to help
of children to unsafe practices. understand the environmental impacts at stake.
In order to help decision makers, the analysis should This highlights the gaps between them and helps determine
emphasise comparing the environmental outcomes of actions for environmental improvements.
the different sub-chains, production techniques and/or
VC steps so as to shed light on which are the “least Illustration 14. Damages generated by sub-chains,
environmentally harmful” ways of operating. example of a cashew value chain
100
Results can be presented under various layouts in order
to adapt to the specific findings and local issues. In some 80
Relative impact in percentage of the highest score

instances, isolating the VC activities (of various sub-chains) 60
located in a particular region will also respond to the concerns
of local authorities. 40
20
Human health
• Benchmarking with similar value chains in Ecosystems Resources
other countries may display weak points and -20
risks, therefore pointing to improvement to be
-40
undertaken for specific steps of the VC.
-60
-80
a) Relative contribution of each VC step
-100
NB: Negative damage figures mean a positive effect
The relative importance of the steps is given in proportion
Savannah Sub-Chain
of the total damage calculated for each area of protection
(Resources, Ecosystems, Human Health). This perspective Forestry Sub-Chain
gives a synthetic view of where detrimental events occur
(Illustration 13).
c) Identification of main factors
IlIllustration 13. Relative contribution of the value chain steps
to damages, example of a coffee value chain Environmental outcomes can be further understood and
detailed by pinpointing the main factors at work for every
problem (midpoint level). This perspective refers to the
Proportion of the total damage for every area of protection
processes at work. Linking them with the practices of
the actors helps in finding bearings for improvements. It
Resources 30% 37% 7% 26% reveals which technical activity (or practice) is at the root
of the negative impact. Examples are given by the use
of agricultural inputs (such as nitrogen and phosphorus)
entailing freshwater eutrophication, or the use of fuel for
Ecosystems 42% 14% 28% 16%
transport of inputs and outputs that often accounts for a
major source of environmental damage as it leads to fine
particulate matter emission, ozone formation, terrestrial
Human 35% 17% 25% 23% acidification and most of all fossil resource depletion.
health
Although most results are normally presented and analysed

0 20% 40% 60% 80% 100%
according to the three areas of protection (Resources,
Agriculture Transport Processing Trade Ecosystems, Human Health), a single score synthetising the
3 types of damages may be calculated. This will help identify
which inventory items are dominating sources of impacts
b) Comparison of sub-chains and damages. It may be relevant to present it according to
sub-chains (Illustration 15) or to technical steps.
Sub-chains can be compared according to the damage they
generate in the three areas of protection (Illustration 14).
© Shutterstock
Illustration 15. Main factors at work, • using the standard functional unit of LCA based on
example of an aquaculture value chain production, i.e. 1 unit of “final product” (e.g. 1 kg of raw
product at the port for export, 1 l of processed juice on
Single Recipe Score the domestic consumer table);
416 279 1,059
100 • relating the whole VC outcomes to the utilisation of
11%
14% agricultural land, i.e. 1 unit of farmed area (for example
80 9% ha).
23%
Contribution in %
These two complementary perspectives allow decision

60 89% 11% makers to appraise the VC activities according to their main
57%
concerns (production, land use, regional emissions, local
40 utilisation of resources…) when comparing sub-chains and
steps (Illustration 17).
50%
20
19%
Illustration 17. Damages from production and land area viewpoints,
6% example of a cocoa value chain
0 Intensive Semi-intensive Extensive
(cages) (ponds) (ponds)
Damages to Human Health
Fingerlings Crop by-products Commercial feed
80 Functional Unit: kg
Transportation Lime Fertilisers 70
(DALY / kg of dry beans)

Electricity Nets Fuels 60
50
40
Furthermore, hotspots should be identified. A “hotspot” is 30
an activity or process which produces critical environmental 20
impact and damage. It points out the VC steps and technical 10
practices that are generating the worst damages, thus 0 Small-scale farmers Small-scale farmers Large-scale
where developing better practices is decisive to reduce these in the forest with in savannahs farmers
support
damages (Illustration 16).
100 Functional Unit: ha
Illustration 16. Hotspots and mitigation points, 80
example of a banana value chain
(DALY / ha)
60
Cultivation 40
- Fertilisation: promote the use of ground-cover plants 20

- Irrigation: prefer pressurised irrigation 0
Small-scale farmers Small-scale farmers Large-scale
in the forest with in savannahs farmers
Packaging support
- Cardboard boxes: substitute with reusable and Damages entailed by:

washable boxes Global warming
Fine particle emission

Export to Europe
• Production activities of the “Small-scale farmers in
- Cooling system: replace containers with refrigerating
savannahs” have a positive effect on human health.
chambers
- Maritime transport: reduce speed, use energy efficient • Production activities of the “Large scale farmers” cause the
engines, optimise the boats’ occupancy rate highest damages.
• Damages of the activities of “Small-scale farmers in the
d) Production and space-based approaches forest, with support” entailed by their impact on global
warming appear substantial when looking at the functional
All LCA results (at midpoint and endpoint, at sub-chain or step unit per ha, but of minor importance in the functional unit
level) dealt with above are broken down into a meaningful per kg. This is due to the high yields of these farmers.
unit, the “functional unit”. All computations are related to this • The main cause of damage is due to the global warming
unit which points at a specific function of the VC. Dealing with action and, to a lesser extent, to the fine particulate
agri-based VCs, a dual perspective exists for analysing the emissions. NB: Six other categories of impact were
environmental damage: calculated (ozone, water, etc.) but are negligible.
e) Supplementary observations Of primary importance are the health consequences of

unsafe practices observed at any step of the VC during field
Some detrimental effects of production practices detected inquiry or documented in secondary information collection.
empirically (see above section on “Inquiring on specific
hazards”) may not be reflected in the LCA calculations
and results. In such a case, these potential damages must
supplement customary LCA graphs.
Illustration 18. Health hazards in cropping practices, example of a tomato value chain
Although farmers are aware of the potentially harmful nature of agricultural chemicals:
• no protective clothing were utilised in the tomato cooperatives visited or by the farmers interviewed. Obvious hazards visually
detected in fungicide-sprayed fields;
• no protective equipment on sale in agro-input shops and no evidence of safety awareness among the salesmen;
• chemical application and activities in sprayed fields are tasks realized by hired male workers.
Observation of a high level of skin contamination of a worker’s legs by a carcinogenic fungicide in a tomato field:
© Claudine-Basset-Mens
• As cropping systems are complex (multiple roles, products, and technologies) with a large diversity of sophisticated
practices (e.g. intercropping or agroforestry schemes) they embed a series of agronomic processes that LCA cannot
grasp easily. In addition, some of the environmental damages foreseen imply (long term) consequences for the
cropping systems, for instance on soil fertility or pest development.
This is due to complex cycles (e.g. Carbon, Nitrogen, etc.) and interactions (Soil X Biodiversity X Climate X Practices).
They are usually out of reach of the environmental expert’s work but a thorough agronomic diagnosis would
trace them. When important agronomic processes that would broaden the direct LCA outcomes are suspected, the
environmental expert may recommend specific studies.
Table 13. Core Questions and Indicators for the life cycle analysis
Framing Question 4: Is the VC environmentally sustainable?

What are the potential damages of the VC on resource depletion?
CQ4.1 Indicators: Resource uses (water, fuel…); Mineral extraction; Energy cost; Increased extraction cost; Hotspots
identification.
What are the potential damages of the VC on ecosystem quality?
Indicators: Emissions of substance (CO2, NH3…); Resource use; Potential deterioration of land quality; Damage
CQ4.2
to terrestrial, freshwater and marine species; Potentially Disappeared Fraction of species (PDF); Hotspots
identification.
What are the potential damages of the VC on human health?
CQ4.3 Indicators: Emissions of harmful substance; Potential deterioration of safety (potable water, working conditions,
etc.); Potential increase in diseases; Disability Adjusted Loss of Life Years (DALY); Hotspots identification.
6.2 CLIMATE CHANGE Illustration 19. Comparing carbon footprints of sub-chains at

all steps, example of a rice value chain
Climate change is mainly resulting from the increase in the Cropping system
global mean temperature due to greenhouse gas (GHG) 3500
emissions. LCA midpoints include a “Global Warming” 2,800
9%
category. This essential component of the Climate Change is 3000
12%
commonly measured using “CO2 equivalent” which translate
GHG emissions into the amount of released CO2 that would 2500
Kg C02 eq/t rice

8%
entail an equivalent climatic effect. The computation is based 2000 22% 20%
on the Global Warming Potential (GWP) of the various GHGs.
13%
The release of all kinds of GHG, by the VC activities intensifies 1500 79% 24%
the concentration of GHG in the atmosphere. It is measured 72%
and converted into CO2 equivalent via the LCA inventory of 1000 65%
35%
flows and using specific characterisation factors provided by

the latest scientific information (IPCC reports, models…). 500 41%
0 Partial water Full water Uncontrolled Rainfed

The contribution of the VC to climate change can therefore be
control control flooding
measured on the basis of the Global Warming midpoint which
enables a carbon footprint to be computed. It allows for an Production Processing Distribution
evaluation of the comparative impact of the sub-chains and/
or of the VC steps on climate change (Illustration 19).
Table 14. Core Question and Indicators for the analysis of Climate Change
What is the potential impact of the VC on climate change?
CQ4.4 Indicators: Emission of greenhouse gases (CO2, N2O, CH4, CFC…); Carbon footprint (kg of CO2eq.); Hotspots
identification.
6.3 BIODIVERSITY This work is based on specialised national or global (FAO,

IUCN, etc.) databases. It consists of identifying the extent
The aim of this work is to warn against potential risks to to which the VC agricultural production areas encroach on
biodiversity, which may lead to the recommendation of areas important for the preservation of biodiversity and thus
performing an in-depth assessment of the impact of the VC. may contribute to altering ecosystem functions. Examples
are: new cultivations within protected areas or areas known
Biodiversity is a major concern for sustainability, particularly for their vulnerability, exclusive single-crop farming on
relevant for VCs with an important agricultural, livestock agricultural land, cut-off of connectivity between sites of
or fisheries component, because it makes the ecosystems high conservation value (due to infrastructures related to the
services on which crops, pastures and fishery resources VC), toxic discharge of effluents from processing workshops
depend possible. and factories (tanneries…). As for aquaculture and fishery,
attention mainly focusses on water quality exiting from
The reasoning is fuelled by three steps: aquaculture units and the state of fish stocks in relation to
• examining the spatial organisation, and fish stocks, the intensity of catches (overfishing and decline of species).
related to the activities of the VC, for a first identification
of the risk situations; The expert essentially performs a cartographic analysis
• searching for the practices and perceptions that could and makes use of the specific indicators available for the
threaten biodiversity; regions concerned. S/he is to cross-check this data with VC
• taking stock of the actions and policies promoting the activities. Indicators such as those selected in Table 15 are
preservation of biodiversity in the territories concerned. of particular interest to inform on biodiversity risks in the
areas of the VC operations. Some may be provided by the
The study of spatial organisation Joint Research Centre (JRC) using its Digital Observatory
for Protected Areas (DOPA). Other available and relevant
This review focuses only on the areas involved in the VC. In indicators (Local Biodiversity Intactness Index…) and
the case of fishery VCs, it also encompasses the examination websites (PREDICT database…) may be used to complement.
of fish stocks.
Identification of practices and perceptions
This work will focus only on the main actors of the VC. It is
carried out by gathering information collected in a scattered
way or purposely by the experts or drawn from existing
studies.
• Technical practices. In addition to the flows analysed

by LCA, agricultural practices that pose a risk
to biodiversity should be identified using a simple
© Shutterstock description of "impact pathways" (cause-and-effect
Table 15. Biodiversity Indicators chains).
INDICATOR This information can thus bring attention to potential
Threatened • Number of threatened species.
risks: rehearsal of monocultures, sequence of crop
species rotations, reduction of agrobiodiversity due to the
standardisation of cultivated varieties or cattle breeds,
Land • Terrestrial Protected Area; types of pest control, surpassing livestock carrying
• Marine Protected Areas;
capacities, discharge of harmful effluents by processing
• Proportion of the KBA* under protection;
• Area affected by land degredation; companies, etc.
• Area of protected connected lands. • Perception. This involves assessing the sensitivity of
producers to biodiversity issues, on the basis of the
Forests • Forest Area Net Change rate;
• Forest Area under sustainable
producers’ own observations on ongoing changes and
• management. developments and on the difficulties they declare to
encounter in their farms (pests, crop auxiliaries, etc.) and
Water • Change of permanent surface water
more generally, in the regions.
bodies;
• Total freshwater utilised; In practice, the expert learns directly either from
• Wastewater undergoing treatment. representative actors or from actors whose experience as
perpetrators, victims or witnesses, informs on these practices
Other • Total carbon stock in the soil;
• Population living around protected areas. and on the level of awareness on risks to biodiversity.
services
* KBA: Key Biodiversity Areas are sites contributing significantly to Inventory of actions and policies
the global persistence of biodiversity, in terrestrial, freshwater and
marine ecosystems. The purpose is to identify the extent and the content of public
and private interventions in favour of the maintenance
of biodiversity (protection, prevention, information, repair of
• In practice, for each value chain study, the JRC damage ...) carried out in the territories concerned by the VC.
will provide the following information: The existence of institutions in charge of biodiversity and of
– an extraction and processing of existing data, targeted policies makes it possible to appraise the possible
especially to scale them to the relevant area evolutions (importance of training, priority for conservation,
for the CV; territorial actions, etc.).
– a cartographic synthesis.
• This work will be carried out within the framework It is also necessary to establish, for the areas and activities
of the DOPA (Digital Observatory for Protected involved in the studied VC, the list of development projects
Areas) and will be completed according to and investment programs based on the principles of
specific questions raised by the team of experts. ecosystem management and/or development of sustainable
agricultural and processing practices.
Table 16. Core Question and Indicators for the exploratory analysis of biodiversity

Does the potential impact of the VC on biodiversity deserves specific studies?
Indicators and main themes: Potentially Disappeared Fraction of species; Carrying capacity; Compliance to area
protection; Existence of Key Biodiversity Areas; Connectivity of terrestrial protected areas; Endangered,
CQ4.5
Threatened or Protected species; Water stress; Crop diversification, rotations and intercropping; Crop varietal
diversity; Livestock breeds diversity; Area affected by land degradation; Soil conservation; Presence of targeted
projects.
07
Synthesis &
recommendations
The synthesis of a VC analysis must deliver a clear picture of the operation of the VC, highlighting the main results and
critical points. It encompasses answering the four Framing Questions, pointing at the risks, to inform on growth, inclusiveness
and sustainability of the VC, summing up the main benefits and strengths, and identifying the main leverage points for
possible action (Graph 12).
Graph 12. Overview of the synthesis
Benefits &
Strengths
Negative impacts &

Risks
Leverage points
Throughout the study, the exchanges within the team around the four Framing Questions create an overall understanding of the
VC system. The experts collectively elaborate an assessment of the dynamics of the VC, laying the foundations of a broad risk
analysis. This allows for a formal synthesis of the study, which should be complemented by recommendations.
• Conclusions must be clearly outlined and written in accessible language, so as to be understood by all stakeholders
and easily used by decision makers.
• Full reports and informative public briefs are made widely available.
7.1 ANSWERING THE FRAMING QUESTIONS 7.2 THE RISK ANALYSIS
The team’s task is to highlight the main results and The Risk Analysis explores how future unfavourable events
conclusions reached for every Framing Question. Experts could negatively affect the situation as observed by the
give their appreciation on the situation (and the evolution team, looking particularly at their consequence on growth,
when updating a VC study) from an integrated perspective. inclusiveness and sustainability.
Key indicators, listed with the Core Questions, show in All kinds of critical events can be taken into account,
a systematic way the performance of the VC in various created by the VC actors’ conduct or stemming from the
fields. Presenting the range of situations and showcasing occurrence of adverse circumstances. Frequent risks in agri-
disparities between types of actors and sub-chains based VCs arise from price trends, price volatility, logistics,
therefore informs decision makers more efficiently than a infrastructures, policies, business environment, social
global average. It opens the reflection on the variability of relations, labour market, food safety, (phyto-)sanitary issues,
impacts and on appropriate targeted measures. weather and climate change, natural resources, etc.
The process of risk analysis encompasses three steps:

• Appraising impacts requires consideration of
their relative importance for actors and at a • Identifying and characterising the main risks: the
more aggregate level (regional, national…). For kind of risk (environmental events, economic shocks…),
instance, the benefits or costs associated with a the factors at work and their corresponding relevant
minor crop in the household or regional economy indicators, and the VC step and actors affected;
do not entail the same consequences as if they • Ascertaining the capacity to manage consequences:
would apply to dominant activities. instruments to mobilize (e.g. insurance schemes),
responsibility (who is in charge), actual feasibility
(resulting from availability, accessibility and affordability);
• Appraising the “Risk level” (from Low to Extreme)
• Experts are invited to appraise the availability combining the assessments of the probability of event
and quality of the main data sets upon which (from Nil to Certain) and of the severity of damages
the main conclusions were built. They can (from Negligible to Critical).
communicate accordingly on the level of
confidence attributable to their conclusions by The goal is not to develop well-defined storylines of the
reflecting on the following criteria: mechanisms at work but to assess roughly to which extent
– representativeness: related to diversity the risk could disrupt growth, inclusiveness and sustainability.
(technologies, spatial distribution);
– time period;
– completeness;
– reliability.
NB: Data collected during a VCA4D study is to be compliant

with the General Data Protection Regulation (no 2016/679)
of the European Union so as to allow for the publication of
the reports and to share information with the stakeholders.
© Shutterstock
Illustration 20. Risk analysis, example of a mango value chain
Social Environmental
Risk description Growth Inclusiveness
sustainability sutainability
Decrease of international prices with the entry of new suppliers
New high quality norms on international markets (carbide use)
Packaging material shortage
Unresolved and deteriorating conflicts over land
Low Moderate
Moderate High High
Extreme
Table 17. Core Question and Indicators for the risk analysis
Addressing the 4 Framing Questions
Which risks may affect the performance of the VC?

Cross-cutting CQ
Indicators: Risk factors; Probability; Severity of damages; Actors affected.
7.3 SUMMING UP BENEFITS AND NEGATIVE Furthermore, to increase effectiveness, it is advisable to

IMPACTS identify leverage points, i.e. situations where the change
to bring in (investment, organisational change, subsidy,
To be easily captured by decision makers, economic, social etc.) will spread in a rapid and sizeable transmission and/or
and environmental benefits must be clearly stated. This a multiplication of the sought effects. Ideally, they allow a
wrapping up relies on the expertise and collective decisions limited intervention to produce important changes on a large
of the team. It is primarily shaped by the functional analysis, number of actors.
followed by the answers to the Framing Questions and finally
completed by the subsequent analyses, particularly on risks. Suggestions for improvement should be concisely
introduced. They are not expected to be detailed as in project
Emphasis is put on the important benefits and negative identification. They may encompass suggesting particular
impacts. Consequences for each of the type of actors studies, e.g. proposing a technological or management
(farmers, workers, businesses…) must particularly be diagnosis at a specific stage of the chain, or a biodiversity
underscored and exposed, based on indicators and evidence- impact evaluation.
based results. Shedding light on the disparities of impacts
between types of actors (e.g. using the common typology) Altogether, recommendations intend to:
can highlight a variety of situations and the need or
potential for change. • Enhance the development of the VC as a whole (pointing
to specific potential to foster, or at drawbacks and
This also applies at a more aggregate level when comparing shortcomings to control);
sub-chains. Relevant cross-cutting perspectives, e.g. on • Bolster the contribution of the VC to growth, and
technology, geographic features or social organisation, can improve its performance regarding inclusiveness and
also unveil gaps, pointing to areas that need to be improved sustainability (economic, social and environmental);
or secured. • Prevent or manage major risks;
• Deepen the knowledge on the VC to fill in critical
7.4 RECOMMENDATIONS information gaps;
• Advise potential follow-up work within the framework of
The knowledge built on the VC enables the team of experts the INTPA -Agrinatura partnership.
to elaborate recommendations for future action.
Ideas for improvement stem from the potential, drawbacks

and constraints revealed throughout the investigations as
well as through comparisons. They may encompass changes
in institutional rules, technological innovations (known or
to be developed), specific supports through information
systems, etc. Taking into account the whole VC, they arise
from combining the main findings of the SWOT analysis and
of the economic, social and environmental analyses.
Recommendations may stress actions internal to the VC (e.g.

organisation or technological improvement) or within a wider
scope (e.g. fiscal policy or infrastructure works). They may
aim at developing favourable factors or countering
unfavourable ones, taking advantage of key drivers.
Ascertaining the strengths to enhance requires the

understanding of pathways that enable actors to deliver
positive outcomes. They fall under all sorts of assets and
skills that craft the capacity to increase benefits, reduce
drawbacks and/or overcome risk effects.
© Shutterstock
Annex
A special look at Fair and Ethical Trade and other Social 1. How should the various certification schemes be taken
and Environmental Voluntary standards into account for establishing the typology of actors
and sub-chains? Selection criteria should take into
In some Value Chains, the existence of “Fair and Ethical account the type of contractual arrangements and the
Trade or other social and environmental voluntary standards” identification of the practices involved that may generate
certifications, such as Fair Trade, Rain Forest Alliance* or differential effects on the indicators, particularly those
organic, may substantiate the identification of a specific related to inclusiveness.
segment or sub-chain to be analysed (in the 4 types of 2. Are the productivity and technical performance of the
analyses). This may result either from the importance of the certified farmers significantly different?
volumes dealt with or because of particular impact in one 3. What are the supplementary costs and how much do
or more of the analytical domains; it may also stem from a they amount to (value, workload…)?
specific demand of the EC or other actors. 4. What are the actual individual, collective and territorial
benefits drawn from being certified? Specifically, what
The certified sub-chain should be analysed using the overall differences does it make on the producers’ direct income?
methodological framework as any other sub-chain. The 5. To which extent are all these performances and impacts
economic, social and environmental results can then be really attributable to the certification system? Beware
aggregated to the overall indicators of the whole chain. This that a “bias” may be induced by the “selection process”
allows the team to respond more completely to the 4 framing of becoming a member, leading for instance the certified
questions for the entire VC and more specifically for this sub- farmers to be among the most entrepreneurial, endowed
chain. Beyond the specific contextual questions, the team or dynamic or advantageously geographically situated
should bear in mind the following issues: ones.
6. Are there particular risks entailed by adhering to the
certification system? (e.g. vulnerability resulting from a
unique crop-specialisation).
* UTZ merged with Rainforest Allaince in 2018.

VCA4D METHODOLOGICAL BRIEF FOR
AGRI-BASED VALUE CHAIN ANALYSIS
FQ1. What is the contribution of the VC to economic growth?

FQ2. Is the economic growth inclusive?
FQ3. Is the VC socially sustainable?
FQ4. Is the VC environmentally sustainable?
for
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METHODOLOGICAL BRIEF FOR

AGRI-BASED VALUE CHAIN ANALYSIS

Agrinatura (https://agrinatura-eu.eu) is the European Alliance of Universities

Manuscript completed in February 2021

Front cover photos from left:

Printed on 100% recycled paper.

WHAT IS THE CONTRIBUTION OF THE

3.1. Profitability & sustainability of actors [17]

IS THE VALUE CHAIN

6.1 Resources, ecosystem, health [33]

1.2 ANALYTICAL PROCESS IN A NUTSHELL

Graph 1. Overall analytical process

FQ1. What is the contribution of the VC to economic growth?

FQ2. Is the economic growth inclusive?

FQ3. Is the VC socially sustainable?

It is to be noted that although those studies are neither

• In their conclusion, the experts may call for

Table 1. Framing and Core Questions

FRAMING AND CORE QUESTIONS

Economic Analysis Social Analysis Environmental Analysis

FQ2. Is this economic growth inclusive?

CQ2.1. How is income distributed across actors of the VC?

CQ2.2. What is the impact of the governance system on income distribution?

CQ2.3. How is employment distributed across the VC?

Addressing the 4 Framing Questions

Graph 2. Overview of the functional analysis

PRODUCTS Which products?

Who does what? How?

Exchange between actors?

Table 2. The building blocks of the VC description

KEY ELEMENTS USUAL INDICATORS & TOOLS

• E.g. cocoa, beef, banana, fish, tomato concentrate, ready

• Sequence of technical and organisational functions along the • Matrix of functional

• Operators directly involved in the production chain and

• Areas of production, sites of marketing, places of

Products Functions Actor Upstream

Paddy rice Step 1

Paddy rice Trading Collector Step 2

Processing Processor Step 3

Husked Wholesaler Step 4

Illustration 2. Matrix of relationships, example of a cocoa value chain

Dry bean exporter Open market Open market Contract

Certified dry bean Vertical

Illustration 3. Sub-chains flow chart, example of a rice value chain

50,000 Extensive farmers 10,000 Intensive farmers Paddy rice

Table 3. Technical processes and practices

COMPONENTS/ USUAL INDICATORS

• Natural and physical environment • Agronomic/aquacultural

Farm • Inventory: type, age, state, condition of use, management

Regional • Matrix, tables,

Table 4. Organisation and governance

COMPONENTS/ USUAL INDICATORS

• Production/supply area, agents involved, terms of trade, stock • Flow diagram

• Regulatory background (permits, authorisations, terms of

• Formal and informal rules (overall and at various VC stages) •

Illustration 4. SWOT analysis matrix, example of a maize value chain

• Experience • Difficult access to land

• New trends in consumption • Land pressure (reduction of fallow)

Functional analysis deliverables