# **Key Points Emerging from the Analysis**

Trade and participation in global value chains (GVCs) can play a key role in economic diversification and development. However, traditional views about how to use trade to leverage growth still dominate the policy discourse. Using trade to move from agricultural production into industrial activities is often seen as the main way to generate trade-led growth and employment, much in line with traditional views of structural transformation.<sup>2</sup> This note takes a more nuanced approach to economic development, focusing on increasing productivity, upgrading, and organizational change within sectors. This approach is particularly relevant in an increasingly globalized and specialized world where borders between economic sectors have become blurred and a focus on tasks has become more meaningful.

In this context, the objective of this new, exploratory analysis is to invigorate and deepen the discussion about productivity growth and upgrading in agriculture in Africa, and the role of national, regional, and international value chains in supporting such structural change. Focusing on maize, cassava, and sorghum in Ghana, Kenya, and Zambia, the project aims to test whether the involvement of farmers in value chains supports structural transformation in the agriculture sector. The project looks at farmers who are suppliers to value chains as well as nonparticipants and dropouts, to shed light on policies that can support farmers to upgrade to higher-value intermediate processes and final outputs and earn a higher and more stable income.

The analysis in this report is based on quantitative and qualitative surveys undertaken in Ghana, Kenya, and Zambia. As part of the main surveys undertaken for this project, 3,935 farmers, 60 aggregators, and 56 buyers were interviewed in the three countries. These surveys were undertaken using different sampling frameworks, including a purposive sample to target farmers on a contract as well as a random sample. The results indicate that market conditions are different for the selected crops—maize, cassava, and sorghum—across the three countries. Maize is clearly a wellestablished and complex value chain in Kenya and Zambia, with significant government investments and benefits from interest from key stakeholders. The maize sector remains less developed in Ghana. Cassava and sorghum are emerging value chains, with potential to be the next frontier crops to mitigate the impacts of climate change. Moreover, cassava can lead to densification of value chains, as it can be used as an input for various products and processes, which include, inter alia, brewing, metal extraction (copper, gold, and cobalt), ethanol production, starch making, and animal stock feed.

Our descriptive results show that farmers who were on a contract saw greater structural transformation; higher output; and better access to seeds, fertilizers, pesticides, technology, and extension services compared with farmers who were not on a contract. The support received or income and output gains reaped by farmers on informal contracts often exceed the support received by those on formal contracts. However, being part of a contract does not necessarily mean that the farmer is part of a value chain. But it would be safe to say that being part of a contract brings the farmer “close” to a value chain. Therefore, being part of a contract is an essential but not sufficient criterion for a farmer to be part of a value chain. Of the farmers under contract, about 50 to 60

> 2 This project adopts a broader interpretation of structural transformation as opposed to traditional views that emphasize the reallocation of production factors or resources between sectors. More recent literature on structural transformation stresses the role that productivity growth within sectors can play and the potential from moving factors of production between firms within sectors.

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