Supply Capacity - FAO

Supply Capacity - FAO

Information dated: 2017

David Neven

Senior Economist, Sustainable markets, agribusiness and rural transformation (SMART)

Economic and Social Development Division (ESA)

Tel: +39 06 570 54255

E-mail: David.Neven [at] fao.org

One of FAO’s Strategic Objectives is to enable the development of inclusive and efficient agricultural and food systems as an effective pathway to ending hunger, reducing poverty while making the best use of natural resources. The development of food systems as such involves improving global and national food systems’ capacity to ensure the availability and accessibility of safe and nutritious food to feed the growing population. FAO’s services related to the supply capacity of food systems include: (i) sustainable food value chain (SFVC) development; (ii) agribusiness development; (iii) increase of agricultural productivity.

Sustainable food value chain (SFVC) development

FAO aims at developing food value chains that are economically sustainable (are profitable throughout all value chain stages, from production to consumption), socially sustainable (have broad-based benefits for society); and environmentally sustainable (have a positive or neutral impact on the natural environment). The adoption of this holistic triply bottom line approach to sustainability is important to ensure that value chain interventions do not bring about any undesired adverse economic, social, or environmental impacts.

Apart from this holistic approach, SFVC development requires a market-driven and system-based approach which recognizes that a food value chain is a part of a complex system consisting of various economic, socio-cultural and natural elements in which everything is interlinked and the root causes of a problem may lie in anywhere within the system (possibly remotely linked to the problem. This approach is important to the design, implementation, monitoring and evaluation of agricultural development projects as well as to the provision of policy advice because only when these projects and policy recommendations address all the correct root causes can they effectively resolve the problems and sustain impacts in the long term.

With the SFVC development approach, there are various upgrading strategies for value chains. Upgrading strategies must be realistic, based on real end-market opportunities, and have clear links to the three dimensions of sustainability (economic, social and environmental). These strategies may be focused on technology upgrading (such as improved seeds), organization upgrading (such as farmers getting into groups for bulk purchase of inputs), linkage upgrading (such as contract farming linking farmers to markets), institution upgrading (such as the improvement of seed law), process upgrading (such as introducing a food-safety procedure), product upgrading (such as production of higher-quality specialty food), and function upgrading (such as farmers taking on additional roles such as aggregation).

FAO has applied the SFVC development approach to supporting countries to develop more sustainable food value chains. The support takes various forms:

  • Dissemination of knowledge through online knowledge platform: FAO has developed and launched the online knowledge platform on SFVC development which provides a user-friendly gateway to practical guidance and information (including handbooks, tools, case studies, news and events, training materials) on the development of SFVCs.
  • Development of knowledge materials: FAO has been developing various knowledge materials to provide practical guidance and information to policy makers and development practitioners on the development of SFVCs. To name a few, these include a series of practitioner handbooks on SFVC development (the first of which is “Developing sustainable food value chains – Guiding principles”) and inclusive business models (“Inclusive Business Models – Guidelines for improving linkages between producer groups and buyers of agricultural produce”).
  • Field project support: FAO has applied the SFVC development approach to field projects in various sectors in various countries to address different objectives. For instance, these include broiler sector Macedonia (aimed at import substitution for the benefits of small-and-medium-scale poultry farmers), and vegetable sector in Cambodia (aimed at the pro-poor development of vegetable sector).
  • Policy advice: Upon request, FAO provides policy advice to country members regarding SFVC development.

Value chain development approach is widely applied across FAO departments and projects. The general contact for value chain development at FAO is the SFVC team, hosted by the Agricultural Development Economics Division (ESA); E- mail: SFVC [at] fao.org.


Sustainable agribusiness development


A healthy agribusiness sector, which comprises the business activities performed from farm to fork, is necessary to generate employment and income in rural areas and increase the efficiency and sustainability of the entire food system, from farmers to consumers.


FAO’s agribusiness work includes the development and dissemination of a series of tools and policies used to stimulate agrifood industry and support the inclusion of smallholder farmers and small and medium agro-enterprises (SMAEs) in rapidly transforming agrifood systems in developing countries. Among the agribusiness policy issues addressed are the following:


  • Designing and implementing broad agribusiness policies and strategies to increase market access, smooth structural transformation, analysis and improvement of the performance and inclusiveness of food systems, etc.
  • Responsible contract farming for inclusive market access. FAO’s contract farming activities include capacity building, technical and legal support to field projects, advocacy, and dissemination of knowledge.
  • Public–private partnerships or public-private-producer-partnerships, which are innovative partnerships that bring together producers, agribusiness, government and civil society actors. FAO provides advice to ministries of agriculture to enable them to engage in this mechanism for pooling resources while mitigating some of the risks of doing business in the agriculture sector.
  • Fostering a territorial approach as a means to attract transformative investments into agribusiness and coordinate cross-sectorial objectives. Particular attention is paid to agro-industrial parks and agro-based clusters, economic corridors, and Special Economic Zones.
  • Encouraging small and medium agro-enterprise (SMAE) development, entrepreneurship, agribusiness start-ups and innovation through Inclusive Business Models and agribusiness incubators.
  • Institutional procurement programmes, which are based on the premise that governments, using their authority and financial capacity to award public tenders, can go beyond the immediate scope of simply responding to the state’s procurement needs by, in tandem, also addressing social, environment or economic concerns of a state.

FAO’s agribusiness work involves:


  • The collection and analysis of information and experiences to understand the changing realities and trends and, based on this, provide support to member countries’ governments by advising them on policies and strategies to improve agribusiness competitiveness and food system performance, including fostering greater public-private collaboration and linkages among business partners.
  • Capacity building activities, including the production of training materials targeting policy-makers, producer associations, development practitioners and SMAEs.
  • Field support through field projects in various subsectors and various countries to address different objectives, notably in Easter Africa, Southeast Asia, and Eastern Europe.