Value chains a good way to diversify agriculture

Source: Saskatchewan Agriculture and Food

It’s all about building partnerships to strengthen Saskatchewan’s agricultural industry.

That’s the concept behind value chains, which promote multiple stakeholders in a supply chain working together to diversify a specific area of the agricultural sector.

Value chains can include any mix of producers, processors, distributors, brokers, wholesalers, retailers and consumers collaborating to meet a specific market need. The groups generally agree to co-operate in order to help build competitive advantage, identify marketing opportunities and improve industry response to market demand.

Here’s an example of how the process might work: a group of lentil producers might work with a processor and a retailer to develop a new lentil soup for the marketplace.

The retailer could help the producers work with the processor on packaging, and provide information on retail pricing requirements.

The producers would secure a long-term contract with the marketer for a specific quality and grade, and the processor would be guaranteed a supply of ingredients for the length of the contract.

The retailer might provide feedback to the processor and producers regarding sales, inventory and consumer comments, which could then be used to improve the product.

According to Gary Coghill, the Value Chain Development Specialist with Saskatchewan Agriculture and Food (SAF), encouraging this sort of teamwork has loads of potential to bolster the Saskatchewan value-added agricultural industry.

“The value chain concept could really apply to any food product idea, and even beyond, to things like manufacturing animal feed or using agricultural products for energy or biofuel development,” said Coghill. “The scope for co-operation is unlimited.”

The seemingly endless economic development and diversification opportunities prompted SAF to establish the Value Chain Program, which offers financial support and technical expertise to parties interested in forming value chains.

Funding is available on a 50-50 cost-sharing basis to approved applicants. It can be accessed in two phases. Up to $30,000 can be tapped to build awareness, develop the value chain concept and conduct training events, while an additional $70,000 can be accessed for the actual value chain implementation and related initiatives.

Coghill stated that the program has provided funding to around 10 value chain projects since it first began accepting applications in June of 2005. So far, most of the initiatives have centred around meat or grain and oilseed products, but “almost everything can potentially fit under this,” he noted.

Value chains can be started by groups in the supply chain simply wanting to get together to develop ideas, but more commonly seem to be spurred by an actual market demand that’s already out there waiting to be met, according to Coghill.

“It’s often driven by the consumer,” he noted. “The uniqueness of a product in demand drives the retailer to seek a supplier, who might then seek out a processor to provide the product, who might then approach a group of producers to supply the commodity to be processed.”

He added, “They end up working together to generate added value for everybody in the supply chain. All the partners see some benefit.”

Coghill stated that a series of workshops has been organized by SAF and the Saskatchewan Council for Community Development (SCCD) for anyone interested in learning more about value chains.

The next ones are taking place in Saskatoon on October 24 and 25. They constitute modules four and five in the workshop series, discussing Marketing and Category Management related to value chain development.

However, Coghill stressed that anyone can attend these workshops, even if they have not attended the previous sessions. “Even if people didn’t attend the first three workshops in the spring, there will be an opportunity to pick them up again at a later date. The order is not as important as being able to obtain the overall information,” he said.

More details on the workshops can be found on the SCCD website at www.sccd.sk.ca. Additional information on value chains or the Value Chain Program specifically can be obtained by calling Gary Coghill at (306) 787-8537, or visiting the SAF website at www.agr.gov.sk.ca (under Processing).

For more information, contact:
Gary Coghill, Value Chain Development Specialist
Saskatchewan Agriculture and Food
Phone: (306) 787-8537

Website: www.agr.gov.sk.ca

Saskatchewan Council for Community Development -- Website: www.sccd.sk.ca