FRANK HARTWICH1, JAVIER EKBOIR1, RAFAEL A. DIAZ PORRAS2
1International Food Policy Research Institute (IFPRI), Costa Rica
2Universidad Nacional, Centro Internacional de Politica Economica Para El Desarrollo Sostenible, Costa Rica
The emergence of chain coordination in agriculture and food production can be seen both as a consequence and a catalyst of market liberalization. Market liberalization constitutes a policy to purposefully change the conditions under which local producers, processors and marketers in developing countries can participate in global commodity chains. There is evidence that the configuration and dynamics of global commodity chains, a result of the structures and power relationships on international markets, have restricted the opportunities for resource-poor farmers and small-scale processors in developing countries; the main share of value added in global commodity chains falls into the hands of internationally operating traders and retailers in the developed world. In a given context of market liberalization governments and donors have fostered policies to ``upgrade'' local commodity chains, that is, enabling chain actors to improve products and processes in a way that increases their revenues and contributes to a better integration of the chain. However, to date, those efforts were only successful in some niche products (e.g. off-seasonal fruits and vegetables, organic food) and some few commodities (soy, wheat, cotton). In some cases (e.g. pineapple, ornamental plants) the involvement in global commodity chains has brought relevant knowledge and technology to the local agents in developing countries. In most cases, however, chain agents in developing countries haven't applied the knowledge and technologies leading to product and process improvement. This knowledge and technology, however, is often at hand; what is lacking is the capability among the economic agents in disadvantaged farming communities to absorb it. Therefore two types of interventions shall accompany any market liberalization policies, especially if those touch low value commodities and subsistence crops: first, developing product and product improvement measures that are useful and applicable in small-scale resource-poor farming environments, and second, capacity building on a broader scale to enable chain actors in developing countries to absorb knowledge and technology.
Keywords: Value chains, upgrading, innovation, Central America