The PPVC deep dives of selected value chains involve a detailed assessment of end-to-end product flows, gross margin
estimates, the economic feasibility of establishing improved or upgraded value chains, and the policy and
investments required to do so. Deep-dive value chain analysis and economy-wide impacts involves the following
Develop an overview of the global, regional, country, industry and value chain context.
Value chain structure - key actors and product mapping.
Identify critical stakeholders, parts of the value chain they engage in and their relationships throughout the value
chain, and establish associated market shares, operational costs, capacities and constraints. This includes a
summary of major challenges and constraints faced by the various value chain actors.
Develop end-to-end product flow map that provides clear route to market from farm-gate, through to trading,
processing, and market segments. This product flow map has to align with supply and demand estimates in the PE Model
to ensure alignment of simulations once value chain upgrades are introduced.
Evaluate economic feasibility - gross margins/profitability.
Estimate gross margins and economic feasibility under “business as usual” conditions for each node of the value
chain. This includes costing of raw materials, relative parity pricing and price ladder with cost build-up
throughout the chain.
Spatial analysis - location of production/consumption/processing hubs & public investments.
Spatial contextualization and integration of value chain attributes, including e.g. location of production potential
versus actual production, consumption hotspots, infrastructure, ports, etc.
Identify potential reforms/upgrades: policies & investments.
Define an “ideal or improved state” for the value chain, in which key bottlenecks and constraints are addressed
using specific levers of change, including but not limited to value chain investments (public and private) and
policy levers. In order to reach the ideal state, a combination of investments and policies are formulated at
specific nodes of the value chain aimed at unlocking more value out of the market system and to boost the level of
participation/inclusiveness. It is important to assess the gender implications (ex-ante) of a VC upgrade
(differential impacts on men and women VC actors). Identifying the potential state of the value chain is made
possible by engaging industry specialists and private sector actors with local and international knowledge and
Modelling alternative future states (PE and RIAPA recursive dynamic with handshake between VC, PE, RIAPA tools).
This phase presents the most challenging component of the PPVC approach from a modelling and analytical phase
because value chain models, PE models and RIAPA are all linked in a recursive approach to develop alternative future
states for a value chain.
The alternative future state is based on the prioritized policy reforms and investments that are introduced in the VC, PE and RIAPA models.
Partial equilibrium (PE) model determines how much demand there will be for the new product and what price it
will sell for in domestic or foreign markets
Gross margin analysis determines production costs at each stage of the supply chain, incl. labor costs, and what
profits actors in the supply chain will earn
Economy wide model determines national economic growth, incl. incomes and domestic demand, and how this effects
macro indicators like exchange rates
From the RIAPA model perspective, the simulation analysis entails constructing very small, hypothetical value chains
and “inserting” them into the model. The cost structures and margins, value-addition activities, and market
penetration of these hypothetical value chains are based on information from the deep dives. Once the new value
chains are established, they are brought to scale and start competing with existing value chains. The costs
associated with policies and investments required to bring the upgraded value chains to scale are also internalized
in the model. The modeling analysis provides results on the economywide returns to policies and value chain
investments, for example, in terms of growth, employment, or poverty.
Clear articulation of policy and public investment recommendations.
Present a clear set of prioritized reforms that present a clear case how the value chain could be restructured and
optimized to enhance competitiveness, profitability and transformational outcomes. The reforms also provide detail
on timing and possible implementation structures
Assessing value chain-specific climate resilience and impacts
During the ranking of value chains, climate indicators are focusing on yield volatility, water footprint and GHG
emissions. The value chain-specific ‘deep dive’ analysis, will include:
- Identification of market-led, value-chain specific interventions delivered by the public and/or private sectors and which are contributing to the NDCs and NAPs.
- Opportunities to reform and improve implementation R&D and extension services to help improve the profitability, efficiency, and competitiveness of each value chain, based on PE modelling (data permitting).
- An initial articulation of how ‘upgraded’ (modeled) value chains will help to improve climate resilience and/or reduce emissions.