Kickstarting agroprocessing value chains

Download Chapter 6

Agriculture has the potential to contribute greatly to economic transformation, just as it did earlier in many developed countries. It can increase incomes in rural areas. It can increase exports and the foreign exchange needed to import machinery and other inputs for industry. It can supply the raw materials to support agricultural processing. It can release labor to manufacturing and other sectors of the economy. It can boost the supply of food to the growing urban areas and the growing industrial labor force, thus moderating increases in the cost of living and thus wages. And it can expand the markets for inputs and consumption goods and services for the nonagricultural sectors.

With agriculture making up the bulk of most African economies, and with most of the poor relying on subsistence farming for their livelihoods, Africa’s economic transformation has to include modernizing agriculture to increase the productivity of smallholders. Using agriculture as a basis for manufacturing and services, particularly by increasing agroprocessing and other agribusiness, will create jobs, especially for women and youth. It will also increase the demand (and prices) for what smallholders produce.

Sub-Saharan green coffee production, by variety and country, 2012/13 season

Source: ACET coffee study prepared for this report.

Source: ACET coffee study prepared for this report.

This chapter focuses on three major agroprocessing opportunities:

• Processing traditional exports such as coffee, cocoa, and cotton, where Africa has demonstrated its global competitiveness in producing raw products, adding value, and creating jobs.
• Scaling up promising nontraditional exports such as fruits by upgrading the supply chain—from farms to processing factories—increasing farmer incomes and generating jobs in factories and allied agribusiness services.
• Import substitution potential, which is growing in importance given the rapid rate of increase in agricultural imports into Sub-Saharan Africa: the total value of imports rose 62% between 2007 and 2011 to reach $37 billion.

For further reference, see background papers (PDFs) on the SoybeanOil Palm, and Fruit value capture opportunities in Africa, or download Chapter 6 of the African Transformation Report.

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