Achieving Coordination in Agricultural Value Chains: The Role of Lead Agents and Multi-stakeholder Platforms

Value chains (VC) have become increasingly prevalent instruments through which smallholder farmers link to markets and potentially overcome market failures and government deficiencies that constrain their competitiveness. With multiple agents involved in the VC, coordination is important to invest in club goods and complementary private investments, engage in resource providing contracts, acquire shared competencies, and achieve high quality standards. Coordination can be facilitated by development agents and enhanced by increased payoffs from coordination and increased beliefs in coordination behavior. Coordination can be achieved through lead agents in the VC, either top-down by large commercial firms or bottom-up by producer organizations. It can also be achieved by multi-stakeholder platforms, either self-sustaining or prodded by public agencies and NGOs. We show through case studies that these multiple paths to coordination are indeed feasible. Abstract Value chains (VC) have become increasingly prevalent instruments through which smallholder farmers link to markets and potentially overcome market failures and government deficiencies that constrain their competitiveness. With multiple agents involved in the VC, coordination is important to invest in club goods and complementary private investments, engage in resource providing contracts, acquire shared competencies, and achieve high quality standards. Coordination can be facilitated by development agents and enhanced by increased payoffs from coordination and increased beliefs in coordination behavior. Coordination can be achieved through lead agents in the VC, either top-down by large commercial firms or bottom-up by producer organizations. It can also be achieved by multi-stakeholder platforms, either self-sustaining or prodded by public agencies and NGOs. We show through case studies that these multiple paths to coordination are indeed feasible.