3.2.4. Costaleo Value Chain Analysis Example
The following is an example of a value chain analysis of Costaleo, a fictional coffee-producing country in South America. Click here to read about Costaleo.
Step One: Data Collection
The value chain analysis team first conducts background research on the coffee sector in Costaleo by reviewing websites and other secondary sources of information. During this phase, the team looks for information such as:
- Importance of coffee to Costaleo's economy (percentage of GDP, employment in the sector, etc.)
- Global end markets for coffee (demand, trends, potential expansion)
- Costaleo's position within the global coffee market
- Average size of coffee farm in Costaleo
- Climatic conditions in Costaleo for coffee production
- Trade data of import and exports on the coffee sector in Costaleo
After a thorough review of relevant secondary sources, the team conducts primary research in Costaleo through a combination of one or more of the following methods: interviews, focus groups, surveys and observation. Through this process which takes approximately 2-3 weeks in the field, the team gleans more information on the value chain including the actors ( including MSEs), relationships between the participants of the chain and factors affecting the competitiveness of the chain.
Step Two: Value Chain Mapping
By using the information gathered during interviews as well as secondary research, the value chain analysis team develops the map of the coffee sector in Costaleo. Value chain mapping enables the analysis team to visualize the flow of the product from conception to end consumer through various actors, as well as the supporting markets and enabling environment affecting the value chain. The first step is to list all the functions and actors in the value chain.
Who are the actors in the Costaleo coffee value chain?
- Input suppliers (four large companies who sell to nurseries, farmers' associations and in some cases directly to farmers)
- Producers (mostly smallholder farmers with plots of 1-5 hectares)
- Small-scale traders
- Medium-scale processors
- Multi-national roasters
Functions may be performed by more than one actor, and each actor may perform more than one function. What are the functions in the Costaleo coffee value chain?
- Input supply
Once they are identified, the functions and actors can be put into a matrix to show who does what. List the functions along the side and the actors across the top and mark the boxes to indicate which actors perform which functions. Try completing the matrix yourself, then click here to see an example of a completed functions and actors matrix.
Once this table is complete, a map can be drawn showing how the product moves from one actor to another and when it passes through the different functions. Try sketching your own map of the Costaleo coffee value chain, then click here to see a sample version of the map.
Step Three: Analysis of Opportunities and Constraints
The next step is to identify opportunities for upgrading in and otherwise improving the value chain and constraints to those opportunities. In a table format as shown below, list the structural and dynamic factors in the value chain, and then briefly describe the current situation, opportunities, constraints and recommendations for addressing them associated with each factor. Then click here to see an example of a completed opportunities and constraints analysis.
Step Four: Stakeholder Workshop
The stakeholder workshop brings together key actors from various levels in the value chain to vet the findings of the analysis and discuss a strategy for increasing value chain competitiveness. Make a list of actors in the Costaleo coffee value chain you would invite to the meeting and draft an agenda for the meeting.