Some 64 per cent of food consumed across the continent is controlled by small and medium-sized enterprises (SMEs), a new report shows.
This has, therefore, helped create vast opportunities for smallholder farmers.
The Alliance for a Green Revolution in Africa’s (Agra) 2019 Africa Agricultural Status Report (AASR) indicates that the SMEs, which are often women-led, include food processors, wholesalers and retailers, and provide a range of services, from transport and logistics to the sale of inputs such as fertiliser, farm machinery, pesticides and seeds to farmers.
Their activities are driving a “quiet revolution” across the continent’s agriculture, connecting smallholder farmers to markets.
The report notes that only about 20 per cent of the food consumed in Africa fits the notion of subsistence agriculture where food is consumed directly by farming households growing it.
The better part of what the continent eats flows through private sector value chains managed by SMEs, which purchase commodities directly from smallholder farmers, process, package, transport and sell the food products to consumers.
“This represents a shift from just decades ago. There has been a ‘quiet revolution’ in the agri-food private sector value chains, linking smallholder farmers to mushrooming urban markets. This has spurred farmers’ participation in food and farm input markets,” said Michigan State University’s Dr Thomas Reardon, a lead author of the report.
Dr Agnes Kalibata, the president of Agra, noted that SMEs are the biggest investors in building markets for farmers today, and will likely remain so for the next 10-20 years.
“They are not a ‘missing middle’, as is thought, but the ‘hidden middle’, ready for support and investment to thrive further.”
The report also indicates that large enterprises play a relatively minor role in directly supporting small-scale farmers.
For instance, only about five per cent of rural farmers are directly linked to large companies through contract farming.
But with proper support, large businesses, including supermarkets and large-scale processors, present a big opportunity as they are likely to play a role in how farmers access credit and markets.
“We live in a global market and our job today is to ensure that SMEs are grounded enough to provide support to farmers, and be competitive enough to survive and thrive in an increasingly intersected global market. Their success will determine the future of the continent’s agriculture and food security,” Dr Kalibata said.
Governments and donors should therefore not “reinvent the wheel” by replicating the work of the private sector and setting up state-supported or subsidised corporations including in remote areas, as this would kill grass roots entrepreneurs, she said.