The current crisis affecting global markets for food crops such as wheat, as a result of the war in Ukraine, has sparked renewed calls across African countries to decrease their food import bill and their stark dependency on other countries to supply basic staples as well as processed goods. 

In Senegal, about 8 million baguettes are eaten every day. However, Senegal does not grow its own wheat and with the majority of it being imported from Russia, the production of bread is now impacted. 

Bakeries across the capital city Dakar are turning to grains indigenous to Senegal for suitable alternatives to produce their dough and to prevent price increases and shortages. This includes millet, sorghum and moringa. The grains are sourced from local farmers and processed in local mills before being added to the bakers’ recipes to produce baguettes and other types of bread and pastries. Although this means texture and taste may be different (let me attest, you haven’t lived if you haven’t tried freshly baked moringa bread!), the benefit of using indigenous grains is not simply an economic one: millet, sorghum and fonio are highly nutritious, drought- and heat-tolerant crops found widely across Western Africa. 

This is one of many examples of new, emerging value chains (including dairy, meat and main staple crops) in Africa that put agroprocessing at the heart of their business model. 

A Rapidly Changing Environment is Shaping the Continent’s Food Systems

Much progress has been made across many parts of Africa over the past years to increase agricultural productivity, reduce hunger, malnutrition, and poverty, create new employment opportunities and improve the livelihoods of rural communities. Yet, demographic change, urbanization, shifting diets, and climate change mean that pressure is growing on food systems to make more food and more varied and nutritious food available and accessible. 

The same developments are transforming the environment for smallholder agriculture, the nature of its links with the rest of the economy, and ultimately the extent to which smallholder farmers and rural economies benefit from current and future growth opportunities. At its core, this raises the question of how to most strategically and efficiently commercialize smallholder agriculture in this new environment and context.

In addition, advances in biotechnology, digitalization and deepening globalization are already having a considerable impact on how food is produced, processed, marketed, traded and consumed across the continent. In fact, the World Bank has estimated that Africa’s combined food and beverage markets will triple in value from USD $313 billion in 2013 to USD $1 trillion by 2030. Other studies suggest that the share of processed foods will increase to 79 percent of food budgets by 2040 in Eastern and Southern Africa. The high value-added processed food category, which includes vegetable oils, dairy, ready-to-eat products such as bread, and food away from home, is expected to show the largest increase in consumption, accounting for nearly half of diets by 2040. In Western Africa, ready-to-cook and ready-to-eat forms of staples such as cassava-based gari in Nigeria and millet-based thiakry in Senegal are quickly gaining ground. 

Moreover, recent analyses of employment data suggest that the agro-processing sector is expanding. A study of employment changes in nine African countries found that employment in agro-processing and other non-farm agrifood system segments is growing rapidly, although from a low base. Another study by ECDPM in 2017 estimates that off-farm agrifood jobs will account for 18-22 percent of new jobs over the next five years in Tanzania, 18 percent in Nigeria, and 11 percent in Rwanda. The number of food manufacturing jobs is expected to grow between 12 and 20 percent in the three countries.

A New Paradigm for Africa’s Agro-processing Sector

In the 2022 edition of the Regional Strategic and Knowledge Support System (ReSAKSS) Agriculture Trends and Outlook Report (ATOR), we look at how the processing sector can help to connect smallholders to new markets in order to raise sales and incomes and increase incentives to invest in boosting agricultural production and growth in rural areas.

Africa’s smallholders have long faced challenges to reach consumers. Commercialization strategies such as improved transport and market infrastructure have helped to overcome the geographic barriers separating rural farmers from urban markets. Today, the growing consumer appetite for processed food presents a new barrier to smallholders: product sophistication. The processing sector has become an essential link connecting smallholders with busy urban consumers who require faster and more convenient forms of traditional staples. 

The evolution of millet consumption in Senegal demonstrates the key role of processing in enabling producers’ access to urban markets. Millet consumption declined sharply during the 1990s and early 2000s. The millet value chain then embarked on a process of rapid transformation by introducing a variety of new ready-to-cook and ready-to-eat millet products. These advances in product sophistication reversed the declining consumption trends and led to marked increases in demand for millet, especially among higher-income urban households, boosting prices and farmers’ revenues. 

Market expansion within the context of food systems transformation happens not just by reaching distant consumers but by meeting consumers’ changing needs through a transition to more sophisticated products. The volume of smallholder output that can ultimately reach urban markets is now determined by the capacity of the processing sector to competitively produce and supply products with higher degrees of sophistication, coupled with strategies to sustainably increase productivity. Thus, policies to promote innovative and competitive processing sectors are central to modern strategies to commercialize smallholder agriculture.

Agricultural commercialization strategies in the context of rapidly transforming value chains require a paradigm shift in policy design and implementation: policies and strategies to facilitate the growth of processing firms should not be seen as merely beneficial to the processing sector itself, but rather as an essential element to unlocking smallholder commercialization in the context of transforming food systems.

In order to strengthen the capacity of the processing sector to meet its potential as a conduit between smallholders and consumers, policymakers must focus on enabling small and medium-sized enterprises to increase innovation and productivity. Strategies must be aligned to the stages of sectoral enterprise development and should take the challenges and needs of individual value chains into account. In particular, skill development interventions to help managers engage in process and product innovation and support for collective action can help firms in emerging food value chains overcome the constraints to growth. 

Firms such as the Senegalese artisanal bakeries now producing bread using locally sourced grains require support to overcome constraints to growth and to better meet consumers’ needs with local products. Strategies and policies to strengthen firms and build productive and competitive processing sectors with the capacity to fully transmit growing consumer demand will in turn offer increased income and growth opportunities for smallholders, benefitting rural economies, livelihoods, nutrition, and countries’ import balances.