Innovations Session N°7

Innovations in the African agroprocessing sector: the key role of SMEs and businesses

The recording of the session is available in English and French on YouTube

 

Supporting the sustainability of the food sector

By processing agricultural products, farmers and SMEs potentially add value to the product, increase their incomes and reduce the post-harvest losses. In Sub-Saharan Africa, food loss and waste due to poor harvesting practices, post-harvest losses, and inadequate packaging and processing account for about one third of all food produced.

To contribute to a more sustainable agrifood sector, the value chain actors need to innovate to minimize food production’s environmental impact, reduce food losses and promote circular economy, developing by products from products which would have been wasted. Innovations include locally-developed technologies and the use of smart farming.

The sustainability of the processing sector will entail developments to more eco-friendly packaging to minimise the use of plastic and pollution. The reduction of food waste along the chain is a priority, notably through improved processes and management systems, use of technologies and storage equipment. Processing already significantly reduces food waste but food processing and manufacturing are energy and water intensive and need a better management towards increased efficiency. Processing can source sustainable ingredients which comply with environmental and social standards.

It is critical to support and strengthen the linkages between smallholder farmers and food processors, strengthening direct relationships to access inputs, advice and logistics that benefit them in terms of quality product and market opportunities for smallholder farmers.

Recent evidence demonstrates that SMEs in the midstream of output value chains help small farmers’ incomes directly and indirectly. Similarly, recent research found a positive association between small-scale producers’ selling output to, as well as receiving training or purchasing inputs from medium-scale farms (who often serve as SMEs engaged in crop aggregation for food and feed companies) and their welfare (higher income and lower experience with poverty). These effects appear to be driven by higher marketing opportunities that the SMEs provide. SMEs along food supply chains also appear to indirectly support famers via their provision of complementary services to farmers. These services include logistics, physical inputs, as well as credit and training.

Adapted finance is much needed for the food processing industry, in the form of competitive and attractive lending and equity financing to the food processing sector.

Research, new product development and marketing are also necessary to respond to changing needs and expectations from consumers. In this context, adequate skills and continuous reskilling allow businesses to remain competitive in a much dynamic sector.

Key points for discussion on promoting food processing among SMEs and businesses

• What are the drivers of success of African SMEs in the food processing segments (what innovations, technologies, knowledge and finance do they attract)?
• What obstacles do they face? What support do they need?
• What incentives can be provided to attract SMEs and smallholders in value-addition in local and export markets?