Keynote Presentation – Trends and outlook for Africa’s agrifood mid segment sector

1. *MSU & IFPRI | **MSU & IITA
The Rise of Agrifood Processing in Africa
Tom Reardon* and Saweda Liverpool-Tasie**

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1. The rise of processed food over 50 years in Africa
a) Tidal wave image
… a small wave over a long distance in the ocean
… then surged into a huge wave when it comes near the shore
b) (Purchased) processed food in Africa:
… emerged & rose steadily 1970s-1990s
… then surged into a huge wave in the 2000s-now

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c) Spreading in waves
1st into “first-stage processed” food (e.g., milled grain
flour)
 Then into “second-stage processed” food (e.g., breads,
biscuits, canned sauces, sodas)
… and “prepared foods” (e.g., “FAFH” food away from
home, like meals from street vendors)

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1st into cities
… then into rural areas
1st among the middle class
… then among the poor
 1st by tiny home enterprises
… then by SMEs
… and then just emerging, by big companies
First for grains
… then for non-grains (animal products, fruit and
vegetables, edible oils etc.)

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Often NOT GRADUAL: many cases of VERY
RAPID transformation
e.g., processed teff in Ethiopia
 Teff in Ethiopia (Minten et al., IFPRI)
… massive investment by SME truckers in transport: walk/horse
to motor vehicles in teff value chain in 10 years (100 years in US)
… huge jump in urban wholesale and milling of teff & sales of
enjera (FAFH)
… spontaneous clusters of SMEs (not government established)
… 50% drop in transport costs, & in mill and wholesale margins
 no subsidies, no NGOs, no big companies helping; no
government direct involvement, just enabling environment
… many “grass roots” booms like this in Africa

6. Teff wholesalers, truckers, millers boom: 300% in
10 years

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2. Three long-term drivers of
processed food’s spread
2.1. Demand Driver
a) Women’s opportunity cost of time &
desire to escape fatigue/drudgery
… 1990s: village women/girls spent 4
hours a day pounding grain

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 women increasingly working outside the home
… in urban areas
… and in rural nonfarm employment
… often in processed/prepared food enterprises
b) Men and women increasingly commuting across
town to work
… consuming FAFH (food away from home, from
food service enterprises)
c) Linked with:
… urbanization: 18% in 1970, 42% in 2021
… densification of rural areas (90% of population near
towns)

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2.2. Technology driver
a) Debate focuses on farm technology
… but processing technology as important to
transformation of the food system
b) African agrifood technology changing fast
… because mainly transferred/adapted from
“earlier transformers” (US, Europe)

10. c) Evolution of technologies for
first-stage processed foods, e.g.,
grain into flour
From home hand-pounding
… to small hammer mills
… to medium/large roller mills
From bulk/unpackaged
… to packaged/branded

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d) Evolution of technologies for second-stage
processed foods, e.g., flour into bread,
noodles, biscuits:
From hand processing
… to extrusion machines & blenders
From wood stoves
… to gas ovens & oil pressure cookers
From unpackaged (e.g., fritters at street
vendor)
… to packaged (e.g., biscuits in store)

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Boom in SME’s in food processing:
packaging, labeling, branding

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2.3. Commercial drivers
a) From mainly tiny home enterprises
… to massive spread of SMEs (now the dominant players) in
processing & food service (FAFH)
… with big employment of women in processing SMEs
… to emergence of large processors
c) From huge (in aggregate) national/domestic investments (still
the dominant players)…
… to emerging regional multinational FDI (e.g., Bakhresa in
Eastern/Southern Africa)
… to emerging global FDI (e.g., Nestle in dairy)

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c) From custom millers…
… to bulk sale in markets
… to small street vendors (FAFH)
… to packaged sale in small shops (still by far the dominant
channel of processed food)
… to supermarkets (emerging but still minor channel for
processed foods)
d) Imports of first- or second-stage processed foods very
small share of total
 Processed food revolution in Africa is operated mainly by
SME processors retailing via small shops

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3. The current situation resulting
from those drivers/trends
a) Common image is that processed food is an “urban middle
class” phenomenon
but our research shows it has spread well beyond the urban
middle class…
… into the diets of the urban poor (only a little behind the non-
poor consumers)
… into rural areas (only a little behind urban consumers)
… and even into the diets of the rural poor

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b) Tanzania example
b.1) Rural Tanzania, of the 63% of diet that is
purchased:
… 29% is unprocessed
… 56% is low-processed (e.g., flour, bread)
… 1% is high processed unpackaged (sweet
buns)
… 6% is ultra-processed (soda pop, cookies
etc.)
… 5% is meals-away-from-home

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b.2) Urban Tanzania:
… 22% is unprocessed
… 49% is low-processed (e.g., flour)
… 2% is high processed unpackaged (sweet buns)
… 9% is ultra-processed (soda pop, cookies etc.)
… 18% is meals-away-from-home
Processed food patterns converging over urban & rural
first-stage processed leading but second-stage and ultra
processed and FAFH growing

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4. Implications
a) We believe food processing is here to stay and still in the
rapid rise phase in Africa
b) Recent debate about processed food emphasizes nutrition &
food safety issues
… including valid concerns about emerging intake of ultra-
processed food leading to obesity & diabetes in Africa as it has
globally
c) But we believe the overall debate about processed food
should be nuanced because agrifood processing provides
important benefits to Africa

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c.1) Food processing is an important employer of African women
c.2) Processed food saves African women time, freeing them for
employment, home tasks, and rest & leisure (remember the old
days of 4 hours of pounding with a heavy stick per day!)
c.3) Food service/FAFH is important to the commuting poor & poor
without kitchens
c.4) Food processing is a major market opportunity for African
farmers, including for quality differentiation; SME processors even
help farmers with information & inputs
c.5) In many cases food processing reduces the cost & seasonality
of food for the poor

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d) SME processing sector has grown RAPIDLY in the past 20 years
where the enabling environment is present
… not a “missing middle”: a HIDDEN MIDDLE (often hidden from
the debate but it is not missing!)
… based on spontaneous growth, not managed clusters
We believe that the main role of government & donors should
be to create an “enabling environment”
 Focus on the fundamentals, on the “blood & bones” of the food
system and the SME processing sector will further grow!
… Roads, electricity, wholesale markets
… with good policies that help SMEs get credit, produce & move
goods without undue red tape and taxation

21. THANK YOU