agro-allied industrialization and regional value chains · 2019-06-29 · how to promote enterprise...

Agro-Allied Industrialization

and Regional Value Chains

Ousmane Badiane, Director for Africa

ECONOMIC GROWTH AND DEMAND OUTLOOK

Most Countries Will Reach Middle Income Status In 2030 All Countries Will Reach Middle Income Status By 2050

Source: Sulser T. B. et al. 2015.

Intraregional Trade By 2025 Under Current Trends

Source: Badiane et al. 2014


Potential agribusiness growth and expected income

to farmersUS$ billion

38

50

10 10.5

150

High value

exports

Commodities Urban food

2000

2030

2.9 1.6 30

Potential Increased

farmer income in

2030

Expected sector growth to 2030

Increase in Demand and Incomes in Billion US$

IFPRI/Badiane

Regional Trade In Staples: Major Source of Future Income Growth

+ $100B = Growth of staple food demand in urban markets in Africa

+ $30B = Potential income for smallholder farmers


UNPROCESSED

PROCESSED

LOW VALUE

ADDED

PROCESSED

HIGH VALUE

ADDED

Non-Perishable

4x(8%)

5.5x(17%)

7x(23%)

Perishable 6.5x(20%)

8X(18%)

10X(15%)


THE RISE OF PROCESSED FOODS

Projected Demand Growth 2010 – 2014 (Estimated Purchased Food Budget Share in 2040)

Source: Tschirley, D et al. 2014.

1. TRADITIONAL MILLET VALUE IN SENEGAL

RAPDIDLY TRANSFORMING REGIONAL VALUE CHAINS

2. MILLET BASED MEALS


HOME BASEDMILLET PROCESSING

READY TO COOK

MILLET PRODCUTSON THE SHELF

3. THE NEW MILLET VALUE CHAIN


TRADITIONAL MILLET BASED MEALS


READY TO COOK




READY TO EAT

MILLET MEALS ON THE SHELF

TRADITIONAL MILLET BASED MEALS


READY TO COOK




No. of firms

Current characteristics of regional agro-allied industries• Rising number of firms producing the same low quality, often imitated goods

#

Time

EMERGING AGRO-ALLIED INDUSTRIAL SECTORProfitability, Growth And Maturation

Source: Badiane, O. and M. McMillan. 2016; Based on Otsuka and Sonobe (2011)

Profitability

No. of firms

Current characteristics of regional agro-allied industries• Rising number of firms producing the same low quality, often imitated goods

• As new entrants copy same products, profitability declines for everyone• No capacity to invest and innovate; stifling firm growth and maturation

$#

Time

EMERGING AGRO-ALLIED INDUSTRIAL SECTORProfitability, Growth And Maturation


Two Key Questions

How to bend the profitability curve and escape from low and declining profits?How to promote enterprise growth through consolidation and specialization?

AGRO-ALLIED INDUSTRIALIZATION STRATEGIES


Profitability

No. of firms

Dotted (solid) lines denote progression of number of firms and profitability without

$#

Time

Profitability

No. of firms


Three Priority Areas for Policy and Investment

A. Process and product innovation: Vocational training & Technology acquisitionB. Market development: Trade & competition policy, quality & standards

C. Cost of services and Infrastructure access: Power, Telecom, Transport

$#

Time



Page <#>

A. SKILLS DEVELOPMENT FOR TRANSFORMING VALUE CHAINS

① No skill upgrading for existing smallholder farmers

② No skill development for emerging value chain professions

Machine operations and maintenance

Processing technology skills

- Product and process innovations- Management and sales

Packaging and distribution

Food quality and safety

Absence of professional & vocational training opportunities means:

Profitability

No. of firms





$#

Time



B. TRADE & COMPETITION POLICIES FOR TRANSFORMING VALUE CHAINS

Source: Badiane et al. 2014

Three policy options for competitive domestic value chains in regional markets

Notes: Notes: * COMESA+Tanzania. Figures on top of bars indicate cumulative increases in regional export supply in 1000 mt.

Profitability

No. of firms





$#

Time



C. INFRASTRUCDTURE CHALLENGES AND OPPORTUNITIES

Africa’s infrastructure gap is lowest in the Telecom Sector

While investing in power and transport infrastructure

Tap into Modern ICT to leapfrog

Torero, M. (2014)

Harness ICT for Quick Gains

Page <#>

USING ICT TO INNOVATE, CUT COST AND GO TO SCALE

① Lower cost of overcoming physical and institutional obstacles

Bridge the distance to millions of dispersed smallholders

Extend the reach of limited technical staff

① Lower cost of access to technology and services

Tap into global knowledge networks

Enable self-learning and peer-to-peer learning

① Link smallholders to other value chain operators

Traders, exporters, processors

Financial services providers

Technology services providers

How ICT can be leveraged for smallholder agriculture

…. an isolated business problem

for a separate segment

of a given value chain

often in specific geographies

Current ICT tools target….

They provide solutionsthat are not replicable nor scalable.

Needed are integrated solutions that digitize all major interfaces between smallholders and other value chain actors.

THE CHALLENGE: TAKING ICT SOLUTIONS TO SCALE

References

1. Badiane, O. and T. Makombe. 2016. Beyond a Middle Income Africa: Transforming African Economies for Sustained Growth with Rising Employment and Incomes. ReSAKSS Annual Trends and Outlook Report.

2. Badiane, O. and M. McMillan. 2016. Economic Transformation in Africa: Patterns, Drivers and Implications for Future Growth Strategies. In Badiane, O. and T. Makombe (Eds.). Beyond a Middle Income Africa: Transforming African Economies for Sustained Growth with Rising Employment and Incomes. ReSAKSS Annual Trends and Outlook Report.

3. Badiane, O., S. Odjo and S. Jemaneh. 2014. More resilient Domestic Food Markets through Regional Trade. In Badiane, O., T. Makombe, and G. Bahiigwa (Eds.): Promoting Agricultural Trade to Enhancing Resilience in Africa. Annual Trends and Outlook Report. Regional Strategic Analysis and Knowledge Support Systems. Washington DC. PP: 38-53.

4. Badiane, O., T. Makombe, and G. Bahiigwa. 2014. Promoting Agricultural Trade to Enhancing Resilience in Africa. Annual Trends and Outlook Report. Regional Strategic Analysis and Knowledge Support Systems. Washington DC.

5. Otsuka, K. and T. Sonobe. 2011. A Cluster-based Industrial Development Policy for Low-income Countries. Policy Research Working Paper No. 5073. World Bank. Washington DC.

6. Sulser, T. B.; D. Mason-D’Croz; S. Islam; S. Robinson; K. Wiebe and M. Rosegrant. 2016. Africa in the Global Agricultural Economy in 2030 and 2050. In Badiane, O. and T. Makombe (Eds.). Beyond a Middle Income Africa: Transforming African Economies for Sustained Growth with Rising Employment and Incomes. ReSAKSS Annual Trends and Outlook Report.

7. Torero, M. 2014. Infrastructure Challenges and Opportunities for Africa South of the Sahara. In Badiane, O. and T. Makombe (Eds.). Beyond a Middle Income Africa: Transforming African Economies for Sustained Growth with Rising Employment and Incomes. ReSAKSS Annual Trends and Outlook Report.

8. Tschirley, D; T. Reardon; M. Dolislager and J. Snyder. 2014. Presentation at CAADP Annual Trends Outlook Report Methodology Workshop: Towards a Middle Income Africa: Long Term Growth Outlook and Strategies. IFPRI Washington DC. December 12.

Thank you!

agro-allied industrialization and regional value chains · 2019-06-29 · how to promote enterprise...

Documents