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Value chains for development: an ethnography of pro-poor market interventions in Ethiopia


International development organisations have recently turned to value chain development as the new tool for poverty reduction and pro-poor growth. In line with current neoliberal economic thinking, this approach sees business and the market as the solution to poverty in developing countries. This has led to a new series of interventions with NGOs and other non-business actors playing a role in developing businesses and business-linkages in the name of development and poverty reduction. The penetration of NGOs into the business world has raised a number of issues, not only regarding implementation, partnership and efficiency, but also concerning broader moral questions about business, society and the aims of development. This paper explores some value chain interventions in Ethiopia and examines the moral dilemmas these interventions bring up for both the staff of the organisations that implement them, and for the farmers in the target communities that are impacted by them.

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Value Chains for Development

Since the 1980s there has been a shift in development thinking from models of state-driven development towards those focusing more on the private sector. Private sector development (PSD) has increasingly been seen to be the key to generating economic growth, employment and poverty reduction. Following the influential work of Gary Gereffi and his Global Value Chain analysis (e.g. Gereffi 1996, Gereffi & Korzeniewicz 1994), many international donors have started to promote value chain interventions in their development policies and programs and this approach has been quickly picked up by many governments, non-governmental organisations (NGOs) and other international organisations (Altenburg 2006:494). Most of the major international organisations involved in development, such as the International Labour Organisation (ILO), the World Bank, and the Food and Agriculture Organisation (FAO), have developed their own bespoke tools and methodologies for value chain intervention, and various national Development Cooperations have followed suit, including the American USAID, the Danish DANIDA, and the Swedish SIDA. A similar approach is also used by the UK’s Department for International Development (DFID) in their ‘Making Market Systems Work Better for the Poor’ (M4P) framework. These approaches can collectively be called ‘Value Chains for Development’ (VCD) (Staritz 2012:11)

A value chain describes the full range of activities required to bring a product from conception, through the different phases of production and processing, to the delivery to the final consumers. While orthodox trade theory assumes trade relations between producers, processors and exporters to be based on arms-length, impersonal, market-based transactions, the value chain approach focuses on the social organisation of these transactions and the chain of relationships between the different players. Integrated value chains are believed to be more efficient and market-focussed, with the retailer or other ‘lead firm’ able to communicate market demands (in terms of quality, quantity, shape, size, etc) to the producers so that optimal products are produced at the right time and in the right quantity.

While pure PSD-orientated value chain interventions tend to prioritise market access, technological improvement and profitability of export firms, ‘Value Chains for Development’ interventions seek to ensure that poor producers are drawn into viable value chains and that their status in existing chains is upgraded so that they benefit from the overall development of the chain. In theory, being part of a well-integrated value chain will provide them with a secure market for their produce and thus increase their income and pull them out of poverty (e.g. Mitchell et al 2009, Visser et al 2012). The challenge, as Altenburg and others have pointed out, is how to ‘design appropriate strategies for shaping value chains in a way that optimises social inclusiveness without sacrificing long-term competitiveness’ (Altenburg 2006:494).

‘Value Chains for Development’ interventions thus usually focus on a whole value chain and work with private sector processors and exporters, business associations, financial organisations and cooperatives, as well as with the poor producers that have typically been the focus of traditional development work. Typical interventions in this type of framework could include linking producer cooperatives with a private sector processor or exporter, training cooperative members on the required quality criteria or assisting them to carry out processing according to the exporter’s requirements, facilitating discussions and negotiations between cooperatives and processors/exporters, providing support to exporters in packaging and branding, financing exporters to attend international trade fairs to promote their products, facilitating government institutions to provide adequate quality control and certification to meet international standards, and so on. As such they mark a quite profound change in the focus of development interventions by NGOs and international donors. In this new context it may be possible to find cases where NGOs and donor money are supporting companies’ travel expenses or production costs, or conversely, there may be occasions where companies find themselves carrying out rural capacity building and training farmers in production techniques. This new development approach thus blurs the boundary between business and development and raises a number of moral dilemmas and questions about the role and responsibility of companies and NGOs, appropriate ways of spending donor money, and, indeed, the overall aims of development interventions.

Academic writing about value chains in developing countries, or about the inclusion of developing countries in global value chains, has mainly fallen into two broad camps. The business and management literature has focussed mainly on questions of value chain governance, efficiency and barriers to entry (e.g. Gibbon & Ponte 2005, Gereffi & Memedovic 2003, Megento 2011, Schalkwyk et al 2012), while the social science literature has explored how the re-structuring of global value chains impacts smallholders and medium sized farmers (e.g. Chalfin 2004, Neilson & Pritchard 2009, Ziegler 2007), or how new modes of ‘ethical governance’, such as Fairtrade, organic and other similar certification systems, have affected small producers (e.g. Dolan 2008, Jaffee 2007, Luetchford 2007, Moberg 2008). To date there has been little study of the social or economic impacts of the use of value chains as a tool for pro-poor development interventions, of how NGOs funded by donor money get involved in strengthening, modifying and establishing new value chains with the express aim of bringing about poverty reduction. This paper seeks to explore what can happen in this type of intervention.

The involvement of non-business actors in value chains raises a number of issues. Firstly, it calls into question what the appropriate role of NGOs, supposedly using donor money for the public good, should be in the business sector with its emphasis on profit and private gain. As morally-driven, non-market actors, what is their purpose and remit in the theoretically a-moral world of market relations? What types of interventions are appropriate and which are not? What moral framework should be used to answer these questions? Secondly, it brings to focus questions about social justice, inequality and exclusion, and the overall aims of donor-funded development. Most donors and NGOs claim that their development interventions seek to target the poorest of the poor, to reduce poverty and to promote empowered, cohesive communities. Can market-led interventions bring about such results? Or do they inherently prioritise the rich, drive inequality and promote capitalist individualism? From the point of view of donors and NGOs, what outcome would be considered a success? And how might this view differ from those of the companies or the producer groups or the communities that are the direct players in the value chain?

The best approach to answering these questions is one rooted in detailed ethnography. The rest of this paper will therefore explore a particular VCD intervention in Ethiopia and show how the local communities, producer groups, processors and NGOs strove to bring about the outcomes that they thought optimal and how they all, in different ways, tried to make moral sense of the changes taking place.

‘Value Chains for Development’ in Ethiopia

In Ethiopia the ‘Value Chains for Development’ approach has been pioneered by the Netherlands Development Cooperation, SNV, in their Business Organisations and their Access to Markets (BOAM) Program which started in 2005. The basic philosophy of the BOAM approach is summed up in SNV’s book-length summary of the BOAM Program:

Vulnerable upstream agents (such as smallholder farmers) can be ‘pulled’ into specific markets, and therefore successfully integrated into economic dynamics to which they were hitherto excluded, or, at best, only participated under very unfavourable conditions. Practitioners aim to accomplish this through: (i) building and enhancing linkages between the ‘middle’ of the value chain (processors, traders, exporters and farmers’ organisations) and the market; (ii) strengthening the relationship between the same ‘middle’ of the value chain and smallholder farmers and, (iii) strengthening the supply capacity (ability to produce increased volumes of goods or services with particular attributes) to ensure that these goods and services are produced at a lower cost and in line with market requirements (Visser et al 2012: 24).

A key part of SNV’s intervention was to form multi-stakeholder Value Chain Coordination Groups, in which relevant actors from business, government, research institutes and from other NGOs were invited to participate. A Value Chain Leader was appointed to guide the process – generally the lead exporter company in the group – and a Value Chain Facilitator was hired to initiate connections between the various stakeholders, to follow up on Coordination Group decisions and to assist members in accessing the various funds that SNV made available. The Coordination Group together made a strategic plan to improve the sector, including a series of interventions that would take place at various points along the chain.

Through participating in these Coordination Groups, a number of other NGOs were influenced by SNV’s work and began to shift their own projects to a more value-chain orientation. By the time the BOAM project came to a close, some six years later, ‘Value Chains for Development’ type interventions had become very popular with the government and among national and international NGOs working in rural development, livelihoods and poverty reduction. VCD quickly came to be considered best practice in these sectors and was mainstreamed into a very large number of government and NGO programs working with huge numbers of farmers throughout the country. As such, a holistic understanding of the impacts of the BOAM program can offer important insights into the possible consequences of a whole new wave of development interventions.

The BOAM program worked on six value chains: honey, oilseeds, milk, pineapple, mango and apple. In this paper I will focus on the apple value chain, which has been lauded as an example of a successful value chain intervention across much of the development sector in Ethiopia. This positive picture becomes rather more complex when we see what actually happened on the ground.

The Apple Value Chain

The Development of Apple Production: The Kale Heywet Church and World Vision

The development of apple production in Chencha started long before the BOAM program commenced and dates back to the 1950s when a small group of SIM Protestant missionaries brought some apples seedlings to plant in their home compound in Chencha town in the Gamo Highlands of southwest Ethiopia. Local people had never seen apples before and had no interest in eating them. So the trees produced apples for the missionaries and their families and after the missionaries left the trees stood there for about 40 years, largely ignored by everyone.

The real development of local apple production started in earnest in the early 1990s, when the son of one of the leaders of the now large and locally-run Protestant Kale Heywet Church, returning from studying Horticulture in England, had the idea of developing apples as a cash crop and selling the fruit to foreigners living in Addis Abeba. Initiating a development project under the auspices of the Church, he set up a small nursery near the Church compound, trained some 50 farmers from in or around Chencha town in apple production and propagation techniques, and provided them with apple seedlings. By 1997 the trees started to bear fruit and he realised that he needed to think about finding a market. He organised the few apple farmers into a cooperative – The Chencha Highland Fruit Marketing Cooperative (CHFMC) – and helped them establish an office and warehouse in a prominent location on the road into Chencha town.

From these small beginnings, apple development leapt forward in 1998 when a large international NGO, World Vision, set up office in Chencha and began to implement an ‘Area Development Program’ (ADP) in the surrounding rural area. The main aim of the Chencha ADP was to enhance rural household food security and it planned to do this through a broad range of interventions including increasing productivity of local subsistence crops (mainly barley, wheat and potatoes), improved milk production of local cows through forage development and cattle fattening, local irrigation schemes and the development of cash crops. According to the project document and project staff, target farmers would be selected from those that were the poorest of the poor, women-headed households or orphans, since the overall aim of World Vision’s work was to help the poor and to improve justice and equality in society.

Building on the work of the Kale Heywet Church, World Vision decided to further promote apples as a cash crop. They started to buy root stock and seedlings from the Church nursery and distributed them to farmers in a number of selected villages around Chencha town. They later set up their own nurseries and by 2008 had distributed over 120,000 seedlings to nearly 12,000 households in the surrounding villages (World Vision 2009:3). They also trained farmers on apple production and management, quality control and post-harvest handling.

One of the target villages for World Vision’s intervention was Masho, a place where I have been conducting anthropological fieldwork on and off since 1995. Despite World Vision’s stated desire to work with the poorest of the poor, women headed households and orphans, most of the initial ‘target farmers’ in Masho were relatively wealthy. Many of them came from the small minority of Pentecostals who had converted in the 1970s or 80s and had been influenced by church teachings to become more entrepreneurial and independent (Freeman 2012b). They had enough land to spare some to experiment with apples, they were keen to learn new skills and techniques, and with their literacy skills and positions of influence in the village-level government, they were able to get themselves selected as the first target farmers. World Vision gave them apple seedlings and trained them in their management and propagation. The training and follow-up were good and people quickly learnt the planting and propagation techniques.

Meanwhile, the efforts of the Kale Heywet Church in Chencha had led to a flourishing market and people from all over the country came to Chencha to buy apples. NGOs working in other parts of the country heard about the growing apple market and came to Chencha to buy seedlings to use in similar projects elsewhere. Thus for a few years there was much more interest in the seedlings than the fruit, and since the price was much higher, local farmers were quick to respond. Whereas the apples would sell for about 12 birr per kg (at the time equivalent to a little over $1), one apple seedling would sell for nearly 50 birr (about $5). Propagating and selling seedlings became a way to get rich fast. So by the time the first few batches of farmers in Masho were producing new seedlings, there was a growing and lucrative market developing in the area. Selling 20 seedlings could earn you around $100 – a quantity of money previously unheard of in this area.

Over the next few years those people who grew apple seedlings, both the Pentecostals who received seedlings in the first or second year and the traditionalists who became interested a few years later, began to make a lot of money. The market was booming and apple seedlings offered a very lucrative income. The most enterprising individuals, and those with the most seedlings, made a lot of money very quickly and invested it into more seedlings, infrastructure or buying equipment to start small businesses. Bahru, for example, eagerly told me how one year he bought young apple shoots from a market further south in the Gamo Highlands where they were very cheap and sold them in Masho where they were twenty times the price. From that one trade he was able to build himself a modern style rectangular house with a corrugated iron roof, something which normally requires several years of saving. Alemayehu, another successful apple farmer, invested his profits into a grinding mill and now runs a booming business in the Masho market place. Wendu has used his apple-derived wealth to purchase a plot of land on the outskirts of Chencha town and to build a small hotel.

Social Impacts of the Apple Boom: Conversion, Inequality and Theft

This economic boom had a huge impact on the social life of Masho, leading to changes in religion, increases in inequality and the creation of new economic institutions. Firstly, it triggered a wave of mass conversions from the traditional culture to Pentecostal Christianity. A key feature of traditional Gamo culture is the system of initiations to the title of halak’a. These initiations can be described as a form of ‘redistributive feasting’ whereby men, along with their wives or mothers, amass surplus wealth in order to take prestigious titles by sponsoring huge feasts at which the community eat (Freeman 2002, Halperin & Olmstead 1976). Between 1995 and 1997, a few years before the apple project started and when I conducted my first period of fieldwork in Masho, people were throwing feasts and becoming halak’a in high numbers (Freeman 2002). Seven or eight years later, as several young men began to earn lots of money through propagating apple seedlings, they found that the community demanded a large share of this wealth by insisting that they become halak’a.

While the ethnographic record has examples of cases in which wealth increases in rural communities have been ploughed into traditional exchange systems, leading to an expansion and inflation of these traditional practices (eg. Bloch & Parry 1989, Robbins 2005, Strathern 1982), this is not what happened in the Gamo Highlands. Instead people desired to expand their consumption of commodities and services and wanted to use their new-found wealth for their own benefit, rather than for social reproduction. Such a thing was thinkable because of the existence of the Pentecostal church.

The Pentecostal Mulu Wengel church first came to Masho in the early 1970s, after the Kale Heywet church had made several unsuccessful attempts to establish itself in the village. However for many years they were also relatively unsuccessful in winning converts and by 1997, when I finished my first period of fieldwork in Masho, only about 10% of the community had joined the church. Nonetheless, the existence of this small group of ‘believers’ opened up a new conceptual space for people in Masho, as they watched how the Pentecostals lived and how they managed to extricate themselves from most of the traditional ritual requirements and yet not receive misfortune from the spirits.

Those that joined the church were required to stop participating in the rituals and practices of the traditional culture and to partake only in church rituals. As has been noted similarly in several other contexts, they were encouraged to make a ‘complete break with the past’ (Meyer 1998, see also Freeman 2012a, Hamer 2002). In Masho, the few existing Pentecostals in the 1990s shunned all traditional practice. They refused to take part in animal sacrifices or to eat meat from animals that had been slaughtered in offerings to the spirits, they stopped drinking alcohol, and during traditional mourning ceremonies they would sit on the side and refuse to join other community members who marched round the mourning field brandishing spears and chanting war songs. Whilst partaking in communal work groups, they would sit separately at breaks and refuse to drink the traditional beer, instead being served milk (Freeman 2002a:57-59). Most importantly, they refused to become halak’a, and stopped taking part in the traditional system of ritual exchange.

Many of the very first apple entrepreneurs were in fact early Pentecostal converts, and they managed to keep their new-found wealth from apples to themselves. They simply tithed 10% of their income to the church, and then spent the remaining 90% on new business activities, nice clothes and school books for their children. Seeing this, many of the other apple entrepreneurs became tempted to convert and thus find a morally legitimate way to refuse to become halak’a. In this situation, many people decided to join the church. The numbers are staggering. Whilst only 10% of Masho were Pentecostals in 1997, some 70% were in 2007. The conversion was sudden and dramatic and coincided exactly with the apple boom. (For a more detailed discussion of this process see Freeman 2012b). In this case individual desire overcame the demands of social reproduction as the new market opportunities, when placed alongside the Pentecostal church, led people to radically change their culture and morality.

A second consequence of the sudden economic growth has been a massive increase in inequality. Those households that were producing apple seedlings got very rich, while those with few or no seedlings watched the economic boom from the sidelines (Freeman 2012b: 176-77). While their neighbours got rich, built houses with corrugated roofs and sent their children to school, they became relatively poorer, remained in their bamboo huts and kept their children at home. Many of them are falling deeper into poverty as local prices soar while their incomes remain static and low. Some receive food aid from the government, others beg for food from the apple elite or ask for occasional paid work on their farms. Lemma, for example, was a frequent uninvited visitor at Wendu’s house; dressed in ragged clothes and looking tired, he would demand food or work. Household members would disappear indoors whenever Lemma appeared, embarrassed at his poverty and yet not wanting to help. Wendu would generally give him something and quickly tell him to go away.

To a certain extent the Pentecostal church and its new discourse about the morality of success helped Wendu and the other apple entrepreneurs assuage their discomfort and guilt at this situation. The claim that success or failure is due mainly to hard work and personal endeavour, rather than structural factors such as ownership of land, access to credit or the ability to get oneself selected by World Vision, placed responsibility squarely at the level of the individual. Rich people, therefore, could consider that they had legitimately earned their wealth through their hard work, while their poorer neighbours had simply been lazy. So Bahru, the successful apple farmer who built a new house with the profits from one year, told me:

I joined the church some 10-15 years ago. I stopped drinking alcohol and I started working hard. Now from all this hard work I have done well. I am one of the largest apple farmers in Masho.

And conversely, Tsehainesh, a relatively wealthy Pentecostal woman, explained to me:

It says in the bible that you must work hard and then you will have food to eat. But today many people are lazy. They spend the day at home drinking araki. That’s why there are so many poor people now.

As a result perhaps of both the breakdown of the traditional culture and the increase in inequality, a third consequence of the economic boom was a massive increase in theft. Never a serious issue before the apple boom, from around 2003 onwards theft became a major social problem. This theft was not generalised, but focussed on the apple seedlings. People would creep into open fields at night, uproot apple seedlings and sell them for a quick profit to the traders that arrived in Chencha town. The extent of this theft was so great that most apple producers moved their seedlings from the fields into their home compounds and started to stay up all night to guard them. As people quipped at the time, referring to the grafting of male and female in apple propagation, and finding the funny side to their unpleasant situation: ‘the apple sleeps with his wife, while we sleep outside’.

The theft problem became so serious in Masho and other villages that the local government in Chencha decided to intervene. Actions by local elders and assemblies had proved ineffective, as had a series of arrests and imprisonments by the Chencha police. In order to cut off the market for stolen seedlings the Agriculture and Rural Development Office (ARDO) made it illegal for individuals to sell apple seedlings. All seedling sales would have to go through the cooperative, where it could be checked that the people selling them were indeed apple farmers. Apple traders would be required to show a receipt from the cooperative before their trucks would be allowed to leave the town.

Whilst this action succeeded in significantly reducing the problem of seedling theft, and allowed Masho’s apple farmers to return to sleeping with their wives, it created a new problem. The vast majority of the rural apple farmers were not members of the cooperative. Suddenly, overnight, they had lost their route to market. Thus between 2005 and 2007 huge numbers of these rural apple farmers applied to join the Chencha Cooperative. In 2007 alone over 1,500 membership applications were sent to the CHFMC (Hayesso 2008). The vast majority, however, were rejected.

Market Struggles: Power In and Between Producer Groups

CHFMC members had no desire to share their newly privileged role as the sole source of legitimate apple seedlings with other farmers, who they had come to see as their competitors. Moreover, its 600 or so members were mainly well-educated and affluent town dwellers, many owning shops and restaurants, and several working for the local government, and they did not want to open their elite club to the throng of bare-foot peasant farmers that were queuing up to join. Furthermore, they had received a lot of support from the church, who had assisted them in the purchase of a truck and in special plastic containers for transporting fresh fruit, promoted them through its national network, and helped them establish contacts with ETFRUIT, the state-owned Ethiopian Fruit and Vegetable Marketing Share Company. These interventions had helped them increase their sales of both seedlings and fruit and they did not want to share these advantages with the new, poorer and less educated rural producers. And so, despite considerable pressure from World Vision, they refused to allow them to join.

After a lot of negotiations and arguments, World Vision instead decided to work with the ARDO to set up another eight apple marketing cooperatives in the rural villages. Between 2008 – 2010 over 3,000 farmers were registered as members of these cooperatives. World Vision tried to support the new cooperatives and help them find a market. Initially they made links between the cooperatives and other World Vision Area Development Programs located in highland areas with similar agro-ecology. These ADPs bought seedlings from the cooperatives and used them in similar apple production interventions in other parts of the country. They also managed to facilitate a linkage with ETFRUIT and thus found some market outlet for class A apple fruits. However, despite this assistance, the new cooperatives struggled. The demand for seedlings from the ADPs was relatively small and further market linkages were extremely limited. Supply of seedlings by rural farmers quickly outstripped market demand.

Very rapidly, therefore, a similar dynamic developed in these cooperatives as had developed earlier in the CHFMC. Committee members sold their own seedlings, and those of their family and friends, before those of other members. At the same time they sought to exclude other farmers from joining the cooperatives by raising the share price and the registration fee to prohibitively high levels. In this way membership was limited to only about 25% of the 12,000 or so farmers who had received apple seedlings from World Vision. The other farmers, along with those who had managed to join the cooperatives but did not have close ties with the management, had to either concentrate on fruit production and stop the more lucrative seedling multiplication, or take the risk of selling their seedlings on the black market for seedlings that was developing on the fringes of Chencha town. Whilst the prices paid by illegal traders were much lower than those offered by the cooperatives, for many apple farmers this option became the only one left open to them.

Abebe, for example, was one of the wealthier Masho apple farmers and a member of one of the rural cooperatives. One year he invested almost all his efforts in raising some 5,000 apple seedlings which he hoped to sell for around 200,000 birr (then equivalent to around US$ 14,000). However, since he did not have close kin or friendship ties with anyone on the management committee of the cooperative, his seedlings were not sold. Instead he decided to take a risk and sell them on the black market. He managed to do this without getting caught and made around 70,000 birr (about US$ 5,000). Wendu, who we met earlier, also faced a similar situation that year, having raised 3,000 seedlings and having failed to sell them through one of the rural coopeartives. Unlike Abebe, though, he was too scared to risk selling them on the black market, and instead his 3,000 seedlings rotted, while he bemoaned his year’s wasted effort.

Access to market thus became a key issue and the CHFMC had a clear advantage over the other cooperatives. It had been established for longer, its membership had more technical and business skills, and its big office had a prominent position on the main road into the town. When buyers came to Chencha in search of apples or apple seedlings they went immediately to the CHFMC and never ventured out to the rural cooperatives, many of which were difficult to access on poor or non-existent roads, had only very basic mud-building type offices and no telephones, computers or other means of communication. Thus the rural cooperatives struggled while the town cooperative went from strength to strength.

In order to try to strengthen the position of the rural cooperatives, World Vision and the local ARDO attempted to establish an apple marketing union, in which all nine cooperatives, including the CHFMC, would have to be members. In this way all the cooperatives would be equal under the umbrella of the union and customer demand for apples would be divided between them. However the union never really got off the ground as the CHFMC, many of whose members also worked in the local government, including the ARDO, managed to block the initiative. As one of the CHFMC members told me in a particularly candid interview:

The Highland Fruit Cooperative didn’t like the idea of a union, because it would have power, more power than the cooperative. Most of the Highland Fruit members are rich people, each has at least half a million birr [about US$ 30,000], a shop, a bus, a car… And they know people in the town and in the government. They forced Rural Development to disband the union. They did not want all the cooperatives to be equal.

Improving Quality and Expanding Markets: SNV and Ecopia

In 2007, at the height of the conflict between the CHFMC and the other apple farmers, SNV’s apple value chain intervention commenced. Unaware of the local dynamics, they decided to work with the CHFMC, to strengthen it as a producer organisation and to assist it in establishing market linkages with fruit processors, retailers and exporters. SNV conducted a number of business and management trainings with the committee, assisted them in the production of a business plan and marketing strategy, and supported them in various promotional activities including participation in trade fairs, advertising on television and distribution of a range of promotional materials. These interventions had a big impact and helped the cooperative and its products get even more known throughout the country. Seedling sales soared from 3 million birr [US$ 175,000 approx.] to 5 million birr [US$ 295,000 approx.] between 2007 and 2008 (Tigist et al. 2009).

SNV also sponsored interventions with CHFMC members to improve apple quality so that more apples would attain class A status and be purchased by ETFRUIT. In 2007 only about 30% of the apples were being graded as class A (Hayesso 2008). The remaining 70% were either too small, had an uneven shape or had marks on the skin. They were either rejected altogether or sold at a much lower price. SNV’s value chains advisors suggested that improving apple quality would lead to increased sales and thus to increased income.

Alongside this, SNV also sought to help the CHFMC develop market outlets for lower quality class B apples. To this end it invited Ecopia, a then newly-established Ethiopian social enterprise planning to produce processed organic fruit products, to visit Chencha and consider buying class B apples for processing into jams, conserves and other products.

Ecopia was formed in 2006 by an Ethiopian woman who had lived in Germany for many years, and had come back to Ethiopia with a vision to both make money and to help her country to develop. It is a self-consciously social enterprise. The founder and CEO explained her vision to me when I met with her at Ecopia’s shop and production facility in Addis Abeba. Proudly showing me bottles of cactus wine, guava jam, apple conserve and various moisturising creams made with medicinal herbs from around the country, she explained to me how Ecopia’s business model would lead to improvements in farmer livelihoods:

We offer [the farmers] the opportunity to work for themselves and make money so that their lives can get better. The natural resources in Ethiopia are fantastic but no-one makes use of it. There are fresh mangos, apples, guava, you name it, and it’s all natural and organic… And yet the people are living in poverty… People in Germany are dying for natural products like this, things that come straight from the land without pesticides and chemicals…My aim with Ecopia is to develop these products and sell them to Western markets in such a way that it helps the local farmers. That way it’s good for everyone.

Ecopia decided to accept SNV’s invitation and started to work with apples in Chencha. After initial attempts to train CHFMC members to process their own apple jam were not successful, Ecopia set up a processing plant on the outskirts of Chencha town. They bought class B apples from the CHFMC and processed them on-site into apple jam and dried apples and then transported them to Addis Abeba for sale. For the first few years Ecopia did well and their involvement was very beneficial to the cooperative. They bought class B apples from the CHFMC at a higher price than they had gained before and thus provided a good market outlet for lower quality fruit, which in turn further drove up the cooperative’s profits. By introducing them to the CHFMC, SNV succeeded in further strengthening this cooperative, while the rural cooperatives have again been excluded.

Last year, however, Ecopia staff found out about the existence of the other cooperatives whilst attending one of the Apple Value Chain Coordination Group meetings. They had not been aware of their existence up until then and were very shocked to learn that there were other producer groups who had not been included in the program interventions. As Ruta recalls:

We didn’t know there were other cooperatives. The idea sold to us by SNV was that there is one cooperative. We didn’t know about the others. We only found out about a year ago. But by then we had already started the project, there was no way for us to pull out. It sounds very simple but it was very shocking for us. We were in a meeting, there is this Value Chain Coordination Group from SNV, and we heard other cooperatives talking about their capacity problems and we were so surprised because we never knew there were other cooperatives as well.

As will be discussed below, Ecopia is now planning to expand its supply base to include the other cooperatives. The motivations for this action, however, are rather more complex than a simple, morally-driven desire to be more inclusive. They represent another element of the on-going value chain struggles (cf. Neilson & Pritchard 2009). First, however, let us pause and return to the questions with which this paper opened.

What is the role of an NGO in a value chain?

The new situation with NGOs and companies ‘working together’ in the value chain has brought up a lot of questions for the participants in these initiatives. For many it is not clear what the role of an NGO in a value chain is, or indeed should be. In the apple value chain in Chencha, as in most VCD interventions, NGOs are engaged in building the capacity of farmers, providing good quality planting material, improving crop management techniques, organising cooperatives and so on. For all actors in the value chain, NGOs and companies alike, it is clear that this is an appropriate role for NGOs. The dilemmas start when it comes to the areas of direct support to businesses and of ‘facilitating’ market linkages between businesses and producer groups.

The BOAM program sought to focus its support on the business actors in the middle of the value chain. SNV staff were quite explicit about this, as was SNV’s book on Pro-Poor Value Chain Development, which stated that:

Across all the value chains BOAM focused its support on processors, exporters, traders – and in some cases farmers’ organisations – situated in the middle section of the chain (Visser et al 2012: 108).

The rationale for this was that these actors in the middle of the chain were best placed to mediate between supply and demand and to form a bridge connecting producers to the market. In practice, this meant that SNV would give direct support to these businesses, in certain cases paying for them to attend international trade fairs or giving them grants for pilot projects. Despite SNV’s insistence that supporting these value chain actors would ultimately benefit all the other actors in the chain, many people found it morally inappropriate that donor money should be given to affluent business people in Addis Abeba rather than to poor farmers in the countryside. Particularly for staff in other NGOs, this use of public money for private good seemed quite wrong. A head of another NGO involved in one of the other BOAM value chains told me:

A lot of the staff think we should just be investing in the community.  That’s our job, surely, to reduce poverty and to invest in the community… They think we should be cutting out all the other actors and be training the community to go through all these stages themselves so that they can process and export their products on their own … There’s a deep suspicion of the private sector in Ethiopia, ten years ago there was no private sector. There was a small elite who made vast profits at the expense of everybody. So people are suspicious – why would the private sector care about the community, and their profits and rights? Why on earth should we NGOs be helping the private sector?

Arguments and conflicts erupted in all of the value chains about this issue, leading to extended discussion and debate. SNV’s book goes on to acknowledge the situation thus:

In the beginning many observers questioned the rationale of this approach, especially when they realised that relatively well-off processors and traders would receive grants to invest in pilot innovation project … Implicit in this criticism was the question of whether development assistance should be used to help private sector companies to scale up their business operations (ibid:108).

For SNV, the answer to this question was ‘a resounding yes’ (ibid:108). For others the situation remained more ambivalent. Even the private sector businesses, such as Ecopia, that had received this kind of support were less willing to talk about it. This reticence is perhaps indicative of some sense of moral unease at receiving this aid from public money and a concern also about the potential moral demands for reciprocity inherent in a gift (cf: Rajak 2011: 177).

The second area where value chain actors disagreed about the appropriate role of NGOs in a value chain was in the area of market linkages. Initially, both NGOs and companies saw a useful role for NGOs in helping to establish connections between farmer producer groups and companies that are looking for supply. The reports of SNV and World Vision proudly tell of the ‘business linkages’ and ‘new market channels’ that they have established for farmers and how they have ‘linked rural cooperatives with private sector exporters’. Likewise, for companies looking to find new rural suppliers, the linking role played by NGOs can be very useful. As Ecopia’s General Manager explained to me:

In the beginning we worked with NGOs because we had no idea of the countryside. We were coming from Addis and we had no idea what the structures are… For us we thought it would be the easier way to go, to go with this NGO that approached us and said ‘do you want to do this project with us?’ Initially it was an advantage because then we could get to know who are the cooperatives, what are they producing, what are their capacities…

The dilemmas started, however, when NGOs continued to be involved in the value chain relationships, particularly in the relationship between producer cooperatives and the company that was interested in buying from them. In these situations, is it the role of the NGO to be a neutral mediator, helping the two sides to understand each other despite their different cultures and communication styles, and helping them both overcome their mutual suspicion and distrust of the other? Or should NGOs take a more pro-active role in these often quite unequal power relationships between companies with well-educated staff, sophisticated market intelligence and considerable buying power and producer cooperatives with less educated people, less market information and less experience in business? Which course of action is morally appropriate for an NGO trying to use value chains to bring about poverty reduction?

These are not easy questions and many of the players in the value chain answer them differently. For Ecopia, NGOs should play a neutral mediating role. If they do this it can be very helpful in building new relationships with non-private sector players (local governments, state enterprises, cooperatives) who have very different ways of doing things. Talking about a similar value chain project in another part of the country where they are working with a different NGO, the Ecopia General Manager explained:

It’s a pleasure working with that NGO. They really understand their role as a mediator and to try to solve conflicts… For example, some months ago when we had a lot of meetings… there was always me in the room and Dr Girma [from a state enterprise] and there was always someone there from the NGO. And the meeting was organised by the NGO and we met in the NGO’s office to make it neutral… That was very helpful. It was really good to have them in the meeting because there were a lot of communication challenges, you know, coming from a government background and coming from the private sector. Our dynamics are very different…  It is two different cultures coming together and it was very useful to have the NGO there to help us understand each other…

Returning to discuss the case of apples from Chencha, however, she painted a rather different picture of the role taken by SNV and World Vision.

The SNV advisor for the apple value chain … we had a lot of issues with her. Because with SNV their role should be advising, advising us, advising the cooperative. But the tendency with NGOs is that, because we are a private company they feel like they have to be the attorney of the cooperative and they take the side of the cooperative and they point the finger at us. That’s a pity, but it happens in many, many cases. Also with World Vision…

The main point of contention in these discussions was price. Most people working in NGOs do not have experience or education relating to business, and they have little understanding of the dynamics of supply and demand, the importance of scale and efficiency or of the functioning of markets more generally. The aim of most ‘Value Chain for Development’ type projects is rural poverty reduction, and the implementing NGO usually has a project document with aims and objectives, activities to be carried out and a logframe, as in most development interventions. Most value chain projects focussing on pro-poor development have an explicit objective to increase producer income through the intervention. As most NGO staff see it, that means helping cooperatives to increase the volume of sales and the price per unit. Thus SNV’s apple value chain intervention explicitly sought to increase the price of apples at source. This overall objective was stated in numerous SNV documents:

To improve the marketability of apple fruit and increase average price levels by at least 25% by 2010 (Hayesso 2008).

This way of thinking sets a target for a particular price outcome, rather than leaving price to be decided by market forces. Whilst this might seem to be in the interests of the farmers, it poses some difficulty for the companies who want to buy the apples and be able to sell them at a marketable price. Ecopia, in particular, has been struggling with the price increases. The General Manager expressed her frustration thus:

In Chencha you can see it clearly, the NGOs … they have strengthened the capacity of the cooperative so that they claim very high prices for their product … The prices are exploding and they’re not controlled.

She blames the NGOs for getting involved and distorting the market. And she understands why they do this, because NGOs have different interests, targets and overall purpose than a business. They are simply behaving like they do in their regular, non-business-oriented projects. But when you apply this approach in a business context the results can be disastrous. She continues:

I have also worked for NGOs and I know what it’s like. If you have to show at the end of the year what have you reached and you can say that ‘Chencha Cooperative has 100% more income because the apple price has increased by…’ then it’s very nice for them. But it’s not good for us. That price increase is fatal.

From her perspective the ‘market distortion’ made a number of Ecopia’s products too expensive to sell and thus last year they stopped making them:

Apple has increased a lot in price, so it is not cost-efficient for us to process it this year. It used to be around 20 birr/kg and now it’s around 30 birr/kg, so it is difficult to process apple products… So we have diversified to other products. To make dried apples is still cost-effective, but to make apple sauce or sliced apple, it doesn’t make a lot of sense…

Because they stopped making certain products, Ecopia bought fewer apples last year. In a non-distorted market, dynamics of supply and demand such as these should lead to the convergence on the most appropriate market price. But in this situation, with the involvement of the NGOs, it instead led to conflict. Huge arguments broke out with the cooperative, the church and even the ARDO. From their perspective, they thought that Ecopia was reneging on a business deal or even planning to pull out of the area. As they saw it, as a private sector company with apparently limitless resources, Ecopia should pay whatever price they demanded. Some of them told the CHFMC to boycott Ecopia altogether. There was a breakdown in trust and an eruption of conflict.

In order to deal with this situation, and to remain in business, next year Ecopia will start buying apples from other suppliers in the area, not just the ‘overly-empowered’ CHFMC. The General Manager told me that they will start to buy from individual farmers and from the rural cooperatives, where she hopes Ecopia can negotiate a lower price. But she worries that the NGOs will get involved again and force up the prices. On the positive side, she said with a wry smile, the SNV program has now finished and World Vision will probably phase out soon, and then it will be easier to work:

We have reached the stage where we will … finish the projects with the NGOs and then continue ourselves… It’s too difficult with them…

What Constitutes a Successful Development Intervention?

The two NGOs in this value chain are divided about whether they see the combined apple value chain interventions as successful. The different opinions largely correlate with their different views about the overall aims of development.

SNV’s overall approach to development is strongly rooted in an individualist, neo-liberal ideology. Its 2007-2015 Strategy Paper states that the core of its development strategy is to develop the capacity of actors at different levels so they can take measures to reduce poverty themselves:

SNV’s core business is to support local actors and increase their capacity to solve their problems, pursue their development goals and reduce poverty and promote good governance (SNV 2006:12).

There is nothing mentioned in any of the strategy papers or program documents about the type of society that might emerge from this kind of approach, or how it can be ensured that the people who become empowered are in fact the poor smallholders which the documents identify as their target beneficiaries. The focus is overwhelmingly on empowering individuals to take charge of their own development and to use the private sector and the market in order to do this. When I asked the Head of the BOAM program about the social consequences of this type of approach, and the possibility that it would lead to individualism and inequality, he told me:

We are not here to save everybody. Sorry about that. I think what is important is that we provide people with the opportunity to choose their own development. So I try to provide people with opportunities, by connecting them to the market, through having a more efficient value chain, through having contacts with a processor or a cooperative… If people grasp it or not, then it’s not so much my decision… I cannot take everybody under my arm. I cannot tell everybody to invest in apples. I think that just goes too far… We can say that we focus more on the ones who want to, rather than the ones who don’t want to… That’s where I’m different from many of the other NGOs who feel that all sheep must be on board before we can move forward, and nobody is allowed to be left behind. This basically means that the pace of the slowest becomes the pace of development, and this is simply not effective …

So for SNV, as evinced in both its documentation and in its local management, market-led economic development is thought to be the key to poverty reduction and the aim of SNV’s interventions is to provide opportunities which some individuals will grab, while others who are slow or lazy or un-motivated will remain in poverty. With this neoliberal focus on economic development and individual empowerment, the work on the apple value chain has been seen to be a resounding success.

For World Vision the picture is more complicated. It is an international Christian NGO and its approach to development is inflected with moral concerns about justice, equality and peaceful societies. Whilst they do not engage in evangelism in Ethiopia, in line with government regulations, their approach to development is very much influenced by their Christian faith. It is based on the concept of ‘transformational development’, a philosophy developed in Christian development circles, and which considers development to be something much broader than just economic growth. The Deputy National Director for Ministry and Strategy explained it this way:

Transformational development focuses on the needs of the community, and particularly of children, and it means using a participatory approach. We intend to address the whole person, spiritually, socially and physically… Our approach is based on justice and fairness. When gender relations are not based on justice and fairness, or relations between rich and poor, or when there are outcastes, we attend to these issues. This is social development. We want to create interdependent and empowered communities…

World Vision also places a greater emphasis on the social and behavioural aspects of development than many other NGOs. The Deputy National Director for Ministry and Strategy told me a story to illustrate the importance of these aspects of development:

We did a project near Nazret some years ago, maybe ten years ago. It was an irrigated agriculture project for pastoralists who were settling down. The economic part of the project was a success and people made a lot of money. But then they started drinking alcohol, marrying more than one wife, getting HIV. It was terrible. It was not development, but disaster.

Thus for World Vision poverty reduction in and of itself is not the end goal of development. They also consider what people might do with any newly generated wealth, and want to ensure that what they do improves the lives of themselves, their families and the broader community. Their view of development and the remit of their actions is thus quite different, and far broader, than that of SNV.

Thus while their reports tell of the project’s success and are full of case studies of individual farmers who have amassed considerable wealth, bought trucks and built hotels because of apples, the staff in the Chencha project office were rather more ambivalent about the impacts of the project. The Agriculture and Food Security Program Facilitator told me:

Our strategy was to build a caring, interdependent society, not a competitive society. But a competitive society has come about. Farmers compete with each other over apple production and access to market, they say that their variety of apple is good while that of others is bad, they argue about everything. There has been a lot of fighting since the apples came… Whilst the project is good because people are getting more money and can send their children to school and wear clean clothes, it is true that it is also making people more separate. People here used to help each other, but now they compete. It’s not good what is happening.


NGO involvement in the business world in Value Chains for Development type interventions is far from straightforward. It brings up moral dilemmas for both NGO staff and company employees. For NGOs, the main concern is about the use of public money for private good and the counter-intuitive situation in which aid money is given to relatively wealthy business people rather than directly to the rural poor. For many this does not seem to be a morally appropriate use of donor money. For companies, the concerns are quite different, and centre on the issue of market distortion. They consider it inappropriate for NGOs to side with producers during business negotiations and to artificially push up prices. For them this threatens to destroy the fine balance of the market system and in the process to make their business endeavours fail.

The outcomes of VCD interventions are also not straightforward. The cycles of intended and unintended consequences spread out far beyond the expectations of those implementing the interventions, in this case leading to religious change, a major increase in inequality, a period of intense social unrest, the creation of new institutions and on-going competition and conflict. The poor of Masho feel excluded and left behind in the economic development that was supposed to be for their benefit, while the relatively wealthy have built modern houses, started new businesses and changed their lives. All of them, however, bemoan the increased conflict that has arisen. As Wendu, one of the successful apple entrepreneurs, told me: ‘I have had a headache every day since the apples came’.

Whilst SNV, which focusses solely on the economic aspects of development, sees the intervention as a huge success, World Vision, with a broader social justice-based perspective, is more ambivalent about the changes that have taken place. Both of them, however, along with many other NGOs, continue to promote VCD interventions whilst at the same time claiming that they seek to target the poorest of the poor, to reduce poverty and to empower rural communities. The ethnography in this paper suggests, however, that VCD interventions may be rather more likely to prioritise the rich, drive inequality and lead to massive conflict and competition in rural communities.


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