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As populations grow across sub-Saharan Africa, particularly in cities, demand for packaged and processed food is exploding. According to one estimate, 50 percent of the food purchased in southern and eastern Africa will be processed by the year 2040 (up from 36 percent today). This shift is linked both to the growth of urban populations and changes in rural demand for processed food. As a Feed the Future research brief recently reported, “The primacy of urban demand, combined with increasing dependence of rural people on markets for their food, mean that connecting rural farmers with urban demand is now central to reducing rural poverty and ensuring rural food security.”
But domestic production is not keeping up. The region imports nearly $50 billion of food each year, despite having one-fifth of the world’s farmland and 60 percent of the globe’s uncultivated arable land. Farmers sell their crops into informal markets, where prices tend to be less stable than those in formal channels. Poorer consumers, meanwhile, have trouble accessing nutritious food that they can afford.
This problem reflects the fact that Africa’s agricultural value chain often has a missing link: competitive food processors. These businesses can drive demand for the produce of the small-scale farming families that still compose two-thirds of the population; create formal jobs; and increase the availability of affordable, safe and nutritious food for the region’s consumers.
Because of these linkages both upstream and downstream, the food-processing sector can be transformational in a way few other sectors can. In Tanzania, for instance, a study found that investment in agro-processing had more potential impact on the total economy than investment in any other industry.