80% of the current global trade in goods takes place along value chains in which each link represents a different task, covering the entire path of a product from the raw materials to the consumer. The SDC helps producers in developing and transition countries position themselves in these value chains so that they can participate more in markets and increase their value added.
The SDC’s focus
The SDC applies the theoretical value chain development approach in order to analyse the market access options available to producers in its partner countries and identify entry barriers and potential. Examining a value chain as a whole enables a better understanding of the competitive conditions and structural integration of economic activities. The objective is to identify promising market potentials and promote them through development measures.
Here, SDC activities focus on the development of local and regional value chains in which poor farmers as well as small and medium-sized enterprises (SMEs) can participate. The SDC supports its partners in the following ways:
- Improving the transparency of markets, in particular by analysing value chains and facilitating access to market information
- Encouraging the creation of manufacturer associations and initiating business contacts
- Supporting the development of networks of micro, small and medium enterprises and their participation in local, regional and global markets
- Establishing and expanding competitive services for investment projects, technical improvements, quality management and qualification
- Providing advice to governments and the private business sector on issues related to market development and regulation as well as to the introduction of quality standards
Rising global GDP mainly benefits countries and regions whose businesses are integrated in local, regional and global value chains. These companies leverage markets as well as cost and specialisation advantages and learn from technological innovation processes. At present, many producers in developing countries are either completely excluded from value chains or manufacture products that offer only few opportunities for local value added – typically agricultural products.
It is often difficult for poor farmers and SMEs to benefit from local, regional and international value chains. They lack information on pricing or contacts to domestic and international buyers, for example. Often there are trade barriers, which disadvantage the poorer participants in the value chain in particular. That is why in addition to supporting producers, other activities are usually needed – at other points in the value chain and in the promotion of better services and legal parameters.