The value chain games
A new initiative, in collaboration with the Partnership Resource Centre (PrC), Netherlands, uses an analytical approach to understand how partnerships work. The first phase of the study, in late 2015, examined three partnerships – potatoes in Ethiopia, sorghum in Kenya, soybeans in Ghana. The objective was to map the three value chains and to define the transaction process between farmer and buyer in order to understand key decision-making mechanisms related to transaction costs, trust and risk.
The value chain map is only a first step. Later in 2016 the team will conduct ‘value chain games’ in each country, involving the main value chain actors. Finally, field observations and analysis will help develop an agent based model to help understand behavioral changes and ‘decision making’ of value chain actors. The main drivers for decision making and certain behavior defined here are: trust, risk (attitude) and transaction costs.
Interviews with a range of value chain actors – farmers, agrodealers, traders, processors, local government authorities – highlighted how different groups can have very different risk or trust perceptions even under the same circumstances. Production costs were also calculated (based on farmers’ estimates) to estimate profitability.