Agrifood Processing Presents Opportunities for African Farmers, But Challenges Remain

The recently released 2022 ReSAKSS Annual Trends and Outlook Report (ATOR) takes an in-depth look at Africa’s agrifood processing sector, including its current status, its challenges, and its opportunities.

The Malabo Declaration, signed by the African Union in 2014, recognized the key role that agrifood processing plays in food system transformation, poverty reduction, increased opportunities for women and youth in agribusiness, increased intra-African agricultural trade, and reduced food insecurity and hunger. However, despite the significant opportunities for economic growth, poverty reduction, and food security presented by agrifood processing in Africa, growth of and modernization within the sector continue to lag. At the same time, there remains a lack of research into the sector’s performance and ways to speed transformation and increase competitiveness.

The 2022 ATOR features 10 chapters covering varying aspects of Africa’s agrifood processing sector, including growth, potential, and constraints; key trends in processing subsectors; and the policies and investments needed to enhance the sector’s ability to contribute to Africa’s overall growth and development.

Agrifood processing contributes to food security and poverty reduction through multiple channels. Processing supplies food products that are easier to transport and that are more differentiated, thus boosting trade. Agrifood processing can also be used to enhance the nutritional content of food and to extend the shelf-life of already nutritious foods, making them more available to consumers far away from production areas. At the same time, however, processing also increases the availability of unhealthy or junk food products, contributing to rising levels of overweight and obesity and highlighting the need for greater research into how to best manage the sector’s growth.

Rapid urbanization and a growing middle class are key drivers of growth in Africa’s agrifood sector. The 2022 ATOR cites researching estimating that by 2050, 59.9 percent of Africa’s residents will live in urban areas; at the same time, Africa’s middle class grew by over half in the first decade of the century. With these demographic shifts has come increased demand for higher value perishable foods such as fruits and vegetables, meat, and dairy products, as well as for processed foods and convenience food products.

Agrifood processors have become increasingly crucial in meeting these demands, and the expanding processing sector has brought with it new opportunities for smallholder both on and off the farm. Processors turn crops into in-demand products for urban consumers, increasing demand for those crops and in turn raising farmgate prices and benefiting smallholder farmers. The expansion of the agrifood sector also provides increased livelihood opportunities off the farm; the report states that Africa’s agrifood processing sector consists of a few large firms and a much larger number of small and micro firms.

Despite the opportunities present, however, agrifood processing in Africa faces numerous challenges – particularly for small and micro firms. These include lack of technical training and human resources, limited access to land and financing, varying access to raw materials, high operational costs, and poor infrastructure such as roads. Such challenges hurt smaller firms in particular by making it difficult for them to expand or to produce higher quality goods.

The report provides several recommendations to help boost transformation in Africa’s agrifood processing sector. First is to identify and properly scale best practices that are appropriate to local and regional conditions; this will include focusing on making locally produced crops more competitive by encouraging and enabling farmers to plant crops that are better suited to processing. The report also highlights the importance of farmers’ groups in coordinating and establishing economies of scale.   

Policymakers also need to prioritize investments in research and development and training and education in the agrifood sector, as well as strengthening intra-African trade to encourage expanded use of local products rather than imports.

Finally, both policymakers and private sector actors need to increase smallholder farmers’ and small firms’ access to financing and public support services, with a focus on marginalized groups such as women and youth.