gallat

Home-based agro-processing for the commercial market: 

1 Home-based agro-processing for the commercial market Stephanie Gallat, Food Technologist, FAO The Rural Poor and Tomorrow’s Markets Parma 23th - 24th June 2007 17th Symposium, International Food and Agribusiness Management Association

Presentation outline: 

2 Presentation outline Characteristics of home-based agro- processing Importance of agro-processing in developing economies Strategies for improving market access FAO’s role in supporting home-based agro-processing

What is home-based agro-processing?: 

3 What is home-based agro-processing? Micro-enterprise level Informal activity; not licensed or registered Dual function: home consumption and income generation Operates from residential premises Does not use specialised equipment

Home-based processing....cont.: 

4 Home-based processing....cont. Employs simple and relatively cheap processing methods Part-time or seasonal activity depending on availability of raw materials Processing methods are not standardised; hygiene is not assured; product quality is variable

Agro-processing in developing economies: 

5 Agro-processing in developing economies employment: agro-processing accounts for 20-35% of wage employment in the manufacturing sector of most developing countries value-addition: in SSA, agribusiness represents 49% of manufacturing value-added and 43% of services value-added

Size of the informal sector: 

Source: Schneider, F. 2002. Size and measurement of the informal economy in 110 countries around the world 6 Size of the informal sector

Contribution of informal sector to national economy: 

Source: Kenya Sessional Paper No.2 of 2005 7 Contribution of informal sector to national economy In Kenya, MSE sector grew from 13% share of GDP in 1993 to 18% in 1999 66% of MSEs are located in rural areas: focus on agricultural based activities Employment in MSE sector accounted for over 74% of national employment in 2002 Average Kenyan MSE employs 1-2 people while over 70% employ only one person

Development of the MSE sector?: 

Source: Southern African Development Community (SADC) 1997 8 Development of the MSE sector? MSEs have high mortality rates: more than 50% don’t survive beyond their 3rd anniversary Of those that survive most don’t grow: less than 1% succeed in moving from micro to small scale

Strategies to improve market access: 

9 Strategies to improve market access KNOW YOUR MARKET essential to analyse consumer demand: product type; quality specifications; mode of supply; affordability IDENTIFY APPROPRIATE TECHNOLOGY “the most important determinant of growth is technological change; in the case of LDCs, on diffusion of knowledge” (Joseph Stiglitz, 2007)

Strategies to improve market access: 

10 Strategies to improve market access ORGANIZE organization of processors to facilitate access to business services and technical training, economies of scale, raising production volume to commercial level LINK INTO SUPPLY CHAINS linkages with producers, input suppliers, traders and secondary processors to promote specialisation, efficiency and information flow

Focus on domestic markets: 

11 Focus on domestic markets International markets offers new business opportunities BUT increased risk Domestic markets are big and growing, offer greater security and easier access Not just supermarkets!

Demand: domestic markets dominate: 

Source: Trade data from UN Comtrade 2002 12 Demand: domestic markets dominate Global processed food sales & traded products 2002

International trade in processed products: 

13 International trade in processed products Source: FAO SOFA 2005

Changing consumption patterns: 

14 Changing consumption patterns

Not JUST supermarkets!: 

15 Not JUST supermarkets!

Technology: is it appropriate?: 

16 Technology: is it appropriate? IMPORTANT to ANALYSE the extra cost of introducing new technology: is the investment justified? Yes, IF: adding value/improving quality opens new market opportunities increasing production volume opens new market opportunities existing processing methods pose food safety hazard opportunity cost of labour-saving technology

Introducing new technology...?: 

17 Introducing new technology...? Sun-drying is one of the most widespread and cheapest technologies for food preservation. Solar drying is an improved form of sun-drying, but its introduction has not been always successful due to: extra cost extra work improved quality and shorter drying time may not be important criteria

OR...improving the traditional?: 

18 OR...improving the traditional? Instead of introducing new technology, improving existing one e.g. improving sun-drying by: raising food off the ground onto mats or drying trays covering food with cloth or netting cutting food into smaller pieces blanching fruits and vegetables to retain colour

Examples of home-based processing: 

19 Examples of home-based processing

Swazi rural processing group: 

20 Swazi rural processing group

Instant soup mixes: 

21 Instant soup mixes

green leafy vegetables: 

22 green leafy vegetables

parboiling: 

23 parboiling

drying: 

24 drying

pounding bambara beans: 

25 pounding bambara beans

Swazi marula industry: 

26 Swazi marula industry

boiling marula juice: 

27 boiling marula juice

shelling marula kernels: 

28 shelling marula kernels

Community processing centre in Afghanistan: 

29 Community processing centre in Afghanistan

pot-in-pot evaporative cooler: 

30 pot-in-pot evaporative cooler

tomato paste manufacture: 

31 tomato paste manufacture

sieving: 

32 sieving

simple dryer: 

33 simple dryer

solar tent dryer: 

34 solar tent dryer

drying vegetables: 

35 drying vegetables

Small-scale oil extraction: 

36 Small-scale oil extraction

commercial oil screw expeller: 

37 commercial oil screw expeller

oil processing training: 

38 oil processing training

Gari processing in West Africa: 

39 Gari processing in West Africa

pressing: 

40 pressing

disaggregating: 

41 disaggregating

roasting: 

42 roasting

High Quality Cassava Flour: 

Source: Natural Resources Institute, UK 43 High Quality Cassava Flour

cassava grits: 

Source: Natural Resources Institute, UK 44 cassava grits

Lessons learnt: 

45 Lessons learnt analyse the market: who are your customers, what do they want, how much can they afford to pay? identify appropriate technology: match technology to market requirements and customers’ ability to pay for improved quality and value-added

Lessons learnt...cont.: 

46 Lessons learnt...cont. organize: to benefit from business services, technical training, increased efficiency and economies of scale link into supply chain: promotes specialisation, efficiency and information flow

FAO’s role in promoting home-based processing: 

47 FAO’s role in promoting home-based processing Information Network on Post-harvest Operations (INPhO) www.fao.org/inpho Small-scale enterprise development resource materials and training guides Catalogue on labour-saving technologies

We are working on...: 

48 We are working on... Food processing guide targeting home-based processors Farmer field school business modules Post-harvest management guides for farmers and micro-level processors