limes

About the Project

The return of industrial policy to many African countries over the past decade has been accompanied by increased focus by policymakers on promoting agro-processing as a route to an inclusive trajectory of industrial development.


Agro-processing comprises the value-adding activities for food between harvest and final consumption,including manufacturing as well as services such as branding, marketing and logistics. These industries are expected to be transformed over the coming decades by a major shift in domestic food demand created by urbanisation rising incomes and changing consumer habits.


These shifts are widely anticipated to create opportunities for inclusive industrialisation, in which structural change is combined with increasing participation of marginalized groups in the economy.


This is because agro-processing is commonly seen as having lower barriers to participation by small and medium sized firms relative to other types of manufacturing, because of its backward linkages to the agricultural sector, and because it is often situated in rural areas where few other forms of industry exist.


However, modernization of food systems creates a range of technological and economic shifts which threaten to create new forms of marginalisation and exclusion, while in many instances large firms are better able to adapt to these changes and exert influence over policy and regulation. Market economies take a wide range of forms, some favouring more dispersed forms of industrial organisation, and others more

concentrated.


The project seeks to investigate the factors influencing the inclusion of small and medium sized enterprises (SMEs) in domestic agro-processing value chains.


Inclusion in agro processing can take a number of different forms. Some forms of inclusion of SMEs can be on highly disadvantageous terms which reduce the poverty reducing potential of industrialization. . Inclusion can also take place on the basis of upgrading capabilities, producing new types of products and using new types of processes. That is, to innovate. In This form of inclusion raises greater opportunities for poverty reduction. However, the beneficial effects on poverty reduction of innovation are not certain. We need to know much more about the specific forms of innovation (and their impact on social relations) that are occurring in order to understand

their implication for poverty reduction as industrialization unfolds.


The project seeks to understand the factors that shape the terms of inclusion of SMEs. In understanding the different experiences of SMEs in agro-processing, and from this the varying paths of industrial change, we see it as crucial to understand the context in

which firms are operating and the kind of relationships they have with other firms, organisations and the broader distribution of power in which these institutions operate. Inclusion is not just a technical matter. Rather, the factors that determine the terms of

inclusion are shaped by the contests between different social actors, in a unique

historical context.


Because of this importance of context, the project is employing a comparative approach, using a contrasting case study design between Tanzania and South Africa – two very different economies in terms of the structure of their agro-processing industries – to develop deeper insights on the subject.


In addition, it is important to consider that ‘agro-processing’ comprises a range of different activities, and the particular technological requirements and market conditions will vary widely between different products. For this reason, we are working cross three value chains in each country. Firstly, maize meal, as a highly-competitive,

low-margin staple grain. Secondly, processed dairy products as a higher-value protein

with major challenges around food safety. And finally, citrus as a horticultural product.


The project is publicly-funded academic research, supported by a grant (ES/S0001352/1) from the UK Economic and Social Research Council’s (ESRC) Global Challenges Research Fund. 

For more information, you can contact the IIAP project at: iiapsps@ed.ac.uk


ESRC
ESRF
The University of Edinburgh