The term “value chain” was first introduced to illustrate how firms could achieve “competitive
advantage” by adding value within their organizations (Porter 1998). Subsequently, the term was
adopted for agricultural development purposes, with an increasing number of bilateral and
multilateral aid organizations using it to guide their agricultural development interventions in
developing countries (Kaplinsky and Morris).
An “agricultural value chain” normally refers to the whole range of goods and services necessary
for an agricultural product to move from the farm to the final consumer. Value chain development
work involves finding ways of linking producers to agribusiness, and hence into the value chains
(Shepherd 2007). Such arrangements often involve contract farming, in which the farmer supplies
agreed upon quantities of an agricultural product to an agribusiness firm, based on the quality
standards and delivery requirements of the firm, usually at a price negotiated and established in
advance. Agribusiness firms often also agree to support the farmers through input supply,
extension advice, and transporting produce to their premises (Eaton and Shepherd 2001).
Promoting market linkages in developing countries is often based on the concept of “inclusive
value chains,” which are existing or new value chains that can incorporate small-scale farmers
(Haggblade et al. 2012).