A new report by the Alliance for a Green Revolution in Africa released on Wednesday has disclosed that millions of small- and medium-sized enterprises (SMEs) source directly from millions more smallholder farmers across Sub-Saharan Africa.
These SMEs, often women-led, include food processors, wholesalers, and retailers. SMEs provide a range of services, from transport and logistics to the sale of inputs such as fertilizer and seed to farmers.
Their activity is driving a “Quiet Revolution” across African agriculture, connecting smallholder farmers to commercial markets at an unprecedented rate.
The report finds that, overall, only about 20 percent of the volume of food consumed in Africa fits the conventional notion of subsistence agriculture—food consumed directly by the farming households that grow it.
The majority of what Africans eat flows through what are known as privates sector “value chains” managed by SME businesses that purchase commodities directly from smallholder farmers and then process, package, transport and sell food products to the urban and rural consumer.
“All this represents a profound turnaround from mere decades ago,” Dr. Thomas Reardon of Michigan State University, a lead author of the report said in a report released in Nairobi.
“There has been a ‘Quiet Revolution’ in agri-food private sector value chains linking small farmers to burgeoning urban markets and growing towns in Africa. This has spurred farmers’ participation in food and farm input markets,” he added.
The 2019 Africa Agricultural Status Report (AASR) from the Alliance for a Green Revolution in Africa (AGRA) highlights how the private sector-led “hidden middle” of the agri-food supply chains has undergone a “Quiet Revolution.”
“SMEs are the biggest investors in building markets for farmers in Africa today, and will likely remain so for the next 10-to-20 years,” said Dr. Agnes Kalibata, President of AGRA.
“They are not a ‘missing middle,’ as is thought, but the ‘hidden middle,’ ready for support and investment to thrive further. Today, we bring them out into the light.”
In terms of the actual value, AASR finds that traders, truckers and processors constitute about 40 percent of the total gross value of the agri-food system in the region – this is the same as the share coming from farms. Retailers constitute the remaining 20 percent.
According to the report, changing conditions have set the stage for the growth of these SMEs, among them an increase in farm productivity that make more raw material available, initial government investments in infrastructure such as roads, among other factors.
Compared to SMEs, and counter to common belief, the report shows that large enterprises play a relatively minor role in directly supporting small-scale farmers.
For example, noted the report, only about five percent of rural farmers are directly linked to large firms through contract farming.
Nonetheless, with proper support, large African businesses, including supermarkets and large processors, present a huge opportunity as they are likely to play an expanding role in how farmers access credit, markets and will ultimately impact employment and rural incomes, noted the report.
JK/abj/APA