What is a value chain?
Just like a supply chain, a value chain involves all the processes and activities involved in getting a product from the farm to the final consumer. Some people call this “gate to plate” or “farm to fork”.
The key difference between a supply chain and value chain is the focus on creating and capturing value through understanding what is valued by the final consumers, and using this in product creation. For example, a group of consumers may value eating meat that is pasture raised and organically grown, and may be willing to pay a premium for this.
Producing a product that meets these demands, and making sure consumers know about this, allows businesses in the value chain to capture extra premium.
In a value chain, information about what the final consumer values is shared with members of the chain, and a story, or marketing message, is developed to share with the final customer. Information flows both ways along the chain!
A value chain may be long, needing many businesses to get a product to market. A good example is selling meat overseas.
On the other hand, it may be short; for example, selling farm produce at a local farmers market.
Moving from financial value to shared values
Moving from a supply chain to a value chain requires thinking about your business, the products you offer, and how this will provide value for the final consumer.
Economists often define value as financial return. However, our research identified that shared and articulated values are often just as important they provide the glue that holds the value chain together.
Best practise value chains not only produce commercial value, but build on, and enhance, the values that each agribusiness in the value chain holds.
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