Introduction

The toolbook provides value chain practitioners with an easy to use set of tools for value chain analysis, with a focus on poverty reduction. Although a number of handbooks on value chain analysis already exist, the aim of this toolbook is to strengthen the links between value chain analysis and development interventions that improve the opportunities available to the poor. Hence, the tools presented here are similar to those presented in other handbooks, but the unique feature of the toolbook is that each of the tools has a clear focus on analysing the impact of the value chain from the point of view of the poor.

Who should use the Toolbook?

The toolbook is designed as a concise manual to be used in the field and by those involved in project development and/or assessment of investment opportunities. The focus is on providing easy to follow tools and clear explanations about their use. This includes examples of how these can and have been used in real value chain analyses in the past. Although the value chain analysis theory that underpins the tools presented in the toolbook is an important element, the practical aspects of analysis dominate the toolbook content.

One of the basic assumptions for using this toolbook is that the starting point of the value chain analysis is market development aimed at making an impact on the poor by providing them with better income or employment security through market participation. This means that farmers/producers are not looked upon as small surplus sellers from within a self-sufficiency strategy but rather as commercial (micro-) entrepreneurs for whom participation in the market is a deliberate and focused choice.

As much as the toolbook is developed for field-based practitioners it is also a useful resource for local policy and decision makers. The toolbook can provide them with a better understanding on how markets can be organised, and the role they can play as decision makers to facilitate the development of value chains and improve the position of the poor within the value chain. The principles presented in the toolbook can also help inform the decision to select certain value chains in which e.g. a province or district wants to be more competitive and to commission value chain analysis research to determine development strategies.

Organisation of the Toolbook

The toolbook is organised in two sections; see Table 1. The first section gives a theoretical background to value chains and also explains the pro-poor entry points for value chain analysis described in this toolbook.

The second section contains eight practical value chain analysis tools that can be used to analyse different dimensions within value chains.

Terminology: dimension 

The eight tools are grouped in three sub-sets. The first sub-set contains two general tools on value chain selection and mapping of value chains. The second sub-set contains three qualitative tools to analyse the governance structure, linkages, and opportunities for upgrading. The third sub-set contains three quantitative tools to analyse costs and margins, income distribution and employment distribution.

Some examples of best practices in value chain analysis and follow-up interventions have been included in the annexes to the manual, demonstrating the pro-poor impact of the interventions chosen. Specific examples appear in the toolbook as boxes. Other important points in the toolbook are highlighted with the following icons:

Take Note	Terminology	Warning	Try This Idea

How to use the Toolbook

Using the tools presented in the toolbook is not meant to be a linear process of working one's way from Tool 1 to 8. Value chain analysis is not a linear process but should try to capture the dynamics and flexibility within the value chain as well. Depending on the main pro-poor interests, time available for analysis and experience with value chain work, some tools may be used more intensely than others.

Table 1 shows various dimensions of pro-poor value chain analysis and the tools that could be utilised to analyse those dimensions. The relevance of each tool to a specific dimension is indicated by the number of ticks; the greater the number of ticks (to a maximum of three ticks), the more relevant the tool is for analysing that particular dimension.

Introduction - Table 1:     Tools for analysing various dimensions of the value chain. The eight tools presented in the toolbook relate more closely with some dimensions than others, as indicated by a greater number of ticks for that association.

Scope and Objective of Value Chain Analysis

Having various tools available to analyse value chains does not mean that all of the tools should be used at all times. The choice of tools to be used (general, qualitative and/or quantitative) will depend largely on the scope and objective of the analysis itself (often dictated by financial or time constraints, or other limitations).

Pro-poor growth has been chosen as the main objective of value chain analysis in this toolbook. Therefore, the focus of the analysis should be on gaining a good understanding of the context in which producers and/or small traders operate as participants of the value chain. In chains that are in an early stage of development the same persons often carry out these two functions. It should also be taken into account also that actors at the producer/trader level are often involved in more than just the single activity that is being analysed.

Terminology: actor

Once the direct context of the activity to be analysed is understood, it becomes important to look at the wider environment in which the value chain operates. For example, the broad government economic policies and the extent to which pro-poor policies have been integrated into and are in tune with these broader government policies, rather than standing on their own. 

Once the value chain analysis has been completed it is important to decide which of possible interventions identified are realistic in the sense that there is a genuine possibility of implementing such interventions, and what the timeframe of implementation could be.