● Make strategic investment in research and development that, rather than being broad-based, are directed at identified areas of competitive advantage.
● Negotiate with international trading partners for market access and tech-nical assistance directed at competing in markets where a competitive advantage has been identified.
In developing such strategies there is no need for developing countries to each start from scratch and to ‘reinvent the wheel’. Developing countries, and the sectors and firms therein, should be encouraged to share experiences. Bilateral and multilateral donors and development organizations can play a role in facili-tating experience sharing and in supporting processes of technology transfer, while FDI and the trade relations that firms in developing countries have with international buyers will be of increasing importance to capacity development at the enterprise level.
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case for promoting agro-industrialization in developing countries, although at the same time the development of agro-industries must follow a clearly defined path that avoids the multiple pitfalls that inevitably go with such fundamental processes of economic and social change. This suggests a gradual approach rather than a ‘great leap forward’ in promoting the agro-industrial sector (Jaffee and Morton, 1995). In turn, strategies are needed nationally and internationally to ensure that developing countries have access to the know ledge and techno-logies necessary to shift their agro-food sectors from the informal to the formal sectors. Experiences need to be shared across developing countries so that the
‘same mistakes are not repeated time after time’. The international community clearly has a role to play here, facilitating cross-border collaboration and access to markets, alongside the efforts of national governments to lay down conditions that are conducive to private enterprise, while establishing regulatory frame-works and policies that guide the evolution of the sector along the ‘right path’.
The future trajectory of agro-industries in developing countries is uncertain.
Yet there are plentiful opportunities and many benefits to be had from agro-industrialization. However, at the same time, if processes of agro-industrialization are not guided appropriately, the negative effects, both short term through exclu-sion of small farmers and informal enterprises and long term through vertical and horizontal concentrations of supply chains and environmental externalities, could be considerable. There is a political imperative to plot a positive way forward, looking at positive and negative experiences and successes and failures to date, and setting out a strategic direction that serves the needs of developing countries and the consumers they serve worldwide.
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Introduction
Agro-industry, understood here broadly as postharvest activities involved in the transformation, preservation and preparation of agricultural production for intermediary or final consumption, typically increases in importance with regard to agriculture and occupies a dominant position in manufacturing as developing countries step up their growth. In all developing countries popula-tion growth is becoming predominantly an urban phenomenon, increasing the role of agro-industry in mediating food production and final consumption.
While many long-standing commodity exports have declined in importance,
‘non-traditional’ food exports, especially fruits, horticulture and fish products, and components of the animal protein complex, have become central to devel-oping country exports. Whether looked at from the point of the domestic mar-ket or exports, therefore, agro-industry plays a fundamental role in the creation of income and employment opportunities in developing countries.
The agro-processing sector covers a broad area of postharvest activities, comprising artisanal, minimally processed and packaged agricultural raw mater-ials, the industrial and technology-intensive processing of intermediate goods and the fabrication of final products derived from agriculture. The hybrid char-acteristics and heterogeneous features of the agro-processing sector, ranging from the informal contract relations of poor rural communities to the complex, transnational activities of global players, suggest the need for caution when presenting an empirical overview, which is the main objective of this chapter.1
3 Agro-industry Trends, Patterns and Development Impacts
J
OHNW
ILKINSON1 ANDR
UDIR
OCHA21Professor and Researcher, CPDA, Universidade Federal Rural do Rio de Janeiro, Brazil; 2PhD Candidate, Department of Economics, Pontifícia Universidade Católica do Rio de Janeiro, Brazil
1 The overview initially follows the conventional agro-industry divisions according to the International Standard Industrial Classification (ISIC – aggregating the 3- and 4-digit levels of Revision 3), which includes the main sub-sectors of: (i) food and beverages; (ii) tobacco prod-ucts; (iii) paper and wood prodprod-ucts; (iv) textiles, footwear and apparel; (v) leather prodprod-ucts; and
The agrifood sector can be seen as comprising: (i) products for subsistence and local markets (basically root crops); (ii) staples for urban domestic markets (predominantly cereals); (iii) traditional export commodities (coffee, cocoa, tea, nuts, cotton); (iv) components of animal protein diet (dairy products, oils and animal feed) and different meat chains (red meat, pigs, poultry) for both domestic and export markets; (v) fresh or non-traditional products (fruits, hor-ticulture, flowers, seafood/aquiculture); and (vi) differentiated traditional exports (fair trade, organics, origin products), which are now oriented also to domestic markets.
Traditional export commodities are primarily tree crops integrated into multi-crop family farming systems. Non-traditional, fresh products tend to demand greater specialization. The latter are particularly associated with labour-intensive, both in production and postharvest, activities. It is argued that they are particularly beneficial from the point of view of the trade balance, and that they tend to offer greater opportunities for capacity building, given the need to transfer know-how on technical demands related to quality and the nature of market demand (Athukorala and Sen, 1998). Others argue, on the contrary, that cheap land and labour are still the key attractions for investing in develop-ing countries, leaddevelop-ing to a ‘race to the bottom’ as countries and regions bid for investments on the basis of these spurious advantages (Gibbon and Ponte, 2005). Other research suggests that the logistical and quality demands of non-traditional products are leading to a shift away from smallholders to large-scale commercial farms (Dolan and Humphrey, 2000). Traditional export commodi-ties or fresh ‘non-traditional’ products require special quality attributes, which involve new forms of economic coordination through contracts and supply-chain management. Here the ‘global value supply-chain’ (GVC) literature is particu-larly important (Gereffi et al., 2005).
This chapter presents an empirical panorama of the agro-processing sector, selecting the most recent data for each country and identifying dynamic trends whenever possible. The core indicators highlighted will be agro-processing pro-duction and value added, contribution to GDP and participation within the total manufacturing sector, the level of formal employment, its gender composition and differences in productivity. With a broader focus on the agrifood system, we also investigate changes in consumption and international trade patterns.
In the concluding section we place our discussion within a broader consid-eration of global tendencies, briefly focusing in turn on energy, global warm-ing, innovation and the emerging institutional and regulatory context governing global markets. The central implication we draw is that policies for agro- industry should occupy a central position in developing country strategies and that domestic initiatives should now receive special attention. We then indicate the areas that, in our view, should constitute the focus of policy measures.
(vi) rubber products. We will focus particularly on the different divisions of agrifood production/
consumption in order to highlight important features of food-processing, the largest sub-sector, and the centre of the most dynamic changes in the agro-processing sector during the last decades.