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Smallholder value chains are dynamic, changing over time in sudden, unpredictable ways as they adapt to shocks. Understanding these dynamics and adaptation is essential for these chains to remain competitive in turbulent markets. Many guides to value chain development, though they focus welcome attention on snapshots of current structure and performance, pay limited attention to the dynamic forces affecting these chains or to adaptation. The paper aims to discuss these issues.

This paper develops an expanded conceptual framework to understand value chain performance based on the theory of complex adaptive systems. The framework combines seven common properties of complex systems: time, uncertainty, sensitivity to initial conditions, endogenous shocks, sudden change, interacting agents and adaptation.

The authors outline how the framework can be used to ask new research questions and analyze case studies in order to improve our understanding of the development of smallholder value chains and their capacity for adaptation.

The framework highlights the need for greater attention to value chain dynamics.

The framework offers a new perspective on the dynamics of smallholder value chains.

Between 2006 and 2011, Nicaragua shipped an average of US$9.4 million per year of smallholder-produced fresh taro (Colocasia esculenta) to the USA; however, by 2016, the US market for Nicaraguan taro had effectively collapsed. The purpose of this paper is to analyze the short-lived taro boom from the perspective of complex adaptive systems, showing how shocks, interactions between value chain actors, and lack of adaptive capacity among chain actors together contributed to the collapse of the chain.

Primary data were collected from businesses and smallholders in 2010 and 2016 to understand the actors involved, their business relations, and the benefits and setbacks they experienced along the way.

The results show the capacity of better-off smallholders to engage in a demanding market, but also the struggles faced by more vulnerable smallholders to build new production systems and respond to internal and external shocks. Local businesses were generally unprepared for the uncertainties inherent in fresh horticultural trade or for engagement with distant buyers.

Existing guides and tools for designing value chain interventions will benefit from greater attention to the circumstances of local actors and the challenges of building productive inter-business relations under higher levels of risk and uncertainty.

This case serves as a wake-up call for practitioners, donors, researchers, and the private sector on how to identify market opportunities and the design of more robust strategies to respond to them.