Innovation Systems Perspective and Value Chains Approach for

Development: Concepts and Principles

National dairy forum, Addis Ababa, Ethiopia, 23-24 November 2010

Berhanu Gebremedhin, ILRI/IPMS

Presentation Outline

The Impact Pathway

Innovation and Innovation Systems Perspective

Value Chains

Integrating ISP and Value Chain Approaches

Resources(Staff time, finance, equipment/materials, transportation etc)

Activities(Problem identification,

research design, implementation,

evaluation)

Outputs (technologies, institutional/Organizational/policy recommendations, publications, briefs etc)

Outcomes (Research outputs are taken up/adopted by intended users)

Impact (economic,social and environ-mental changes)

The Impact pathway

Commodity versus technology development approaches

Commodity development: an approach that is focused improving the productivity and profitability of the commodity based on analysis of constraints and opportunities along the value chain Major constraints can be related to technology, markets,

institutions, service delivery, and organizations. Is comprehensive

Technology development: an approach that is focused on promoting a production technology in order to alleviate the technical production constraints or expand the technical opportunities of a commodity Presupposes that the key constraint is the technology

What is Innovation?

Successful application of “knowledge” to economic, social & environmental benefit.

- Knowledge creation, adaptation, dissemination and use of knowledge, not just knowledge creation (Invention)

- Both new knowledge and novel combination of exiting knowledge

Why ISP?

Criticism on development interventions for having low impact

Knowledge/invention comes from multiple sources

Need to exploit the complementarity between researchers and development stakeholders Roles

Problem definition Research design Result validation Implementation

Their knowledge systems Scientific/modern knowledge Indigenous/local knowledge

What is a Value Chain? An agricultural value chain is considered as an

economic unit of analysis of a particular commodity (eg. milk) or group of commodities (eg. dairy) that encompasses a meaningful grouping of economic activities that are linked vertically by market relationships.

A value chain encompasses a set of interdependent organizations, and associated institutions, resources, actors, and activities involved in input supply, production, processing, and distribution of a

commodity.

A value chain entails the addition of value

Value chains are also the conduits through which finance, information and technology are disseminated

Business development services

Services that play supporting role to enhance the operation of the different stages in the value chain and the chain as a whole

Infrastructural services (market place development, roads and transportation, communication, energy supply, water supply)

Production and storage services (input supply, genetic and production hardware from research, farm machinery services and supply, extension services, weather forecast, storage infrastructure)

Marketing and business related services (market information, market intelligence, technical and business training, facilitation of linkages of producers with buyers, organization and support for collective marketing)

Financial services (credit, saving, risk insurance)

Policy and regulatory services (property rights, market and trade regulations, investment incentives, legal services, taxation)

Production

Post-harvesthandling

Processing

Retailing

Consumption

Trading

Trading

- -

Market information and intelligenceMarket information and intelligence

Financial servicesFinancial services

TransportationTransportation

CommunicationsCommunications

Govt. policy regulationGovt. policy regulation

Tech. & business training & assistanceTech. & business training & assistance

Production input supplyProduction input supply

& Business Support Services

ResearchResearch

The Value Chain

Transport

Input Supply

Framework Conditions

INSTITUTIONS

Knowledge Generation

Knowledge Adaptation

Knowledge Dissemination

Knowledge Application + Use

INNOVATION CAN OCCURE ANYWHERE IN THE VALUE CHAIN

Agro-industry inputs and services Agricultural

Production

Agro industryProcessingMarketingRetailing

LEARNING

ACTORS+ACTIONS+INTERACTION

Value additionValue addition

Integration of Value Chain and Innovation

Innovation possibilities in VC

Input supply Production and post harvest Marketing

Organization and coordination of marketing functions

Market information and intelligence Market institutions Market infrastructure

Technical assistance and training Financial services Policy and regulatory issues

Integration of Value chain and Innovation system perspective

Target Group Identification

Broad understanding of the Livelihood of the Target Groups (Unit of analysis is the HH)

Prioritizing enterprises within the Target Group

Identifying and describing the Value chain of priority enterprises

National Innovation System- Generic (dealing with science and technology at National Level)

Intervention Based Innovation System (Based on the priority problem)

Agricultural Innovation System-Generic (dealing with Agricultural S & T)

Commodity based Innovation System (dealing with the entire value chain of an enterprise)

Prioritizing the key component of the Value chain-1st level priority setting

Prioritizing problems within the priority key component identified

Analysis of the priority problems identified

Identifying potential Intervention

Identifying feasible Intervention

Planning, Implementation and Evaluation

Screening (Ex-ante assessment)

Dissemination, Utilization by end users, and scaling out

Thank You for Your Attention!!!