Definition of agro-industry: post-harvest activities involved in the transformation, preservation and preparation of agricultural production for intermediary or final

consumption (with emphasis on food) Whether looked at from exports (esp. nontraditionals) or domestic market (population growth/urbanization) agro-industry fundamental to income and employment creation in developing countries

 In an extended definition agri-processing ranges from 20-35% of developing country GDP. The entire food-system may account for as much as 50% of developing country GDP. The agribusiness to agriculture ratio increases with development (0.6, 2.0 and 3.3 using WDR typology) and is highly correlated with HDI.

Year*

Agriculture Share of GDP**(1) 0.39 0.16 0.08 0.01

Agribusiness Share of GDP**(2) 0.22 0.32 0.27 0.13

Ratio (2)/(1) 0.57 1.98 3.32 13.00

% Agro% Food-processing processing and beverages in sector in GDP* total manufacturing* 0.050 0.040 0.060 0.468 0.224 0.203 -

Agriculture-based Countries Transforming Countries Urbanized Countries United States LICs LMICs UMICs

0.043 0.055 0.051

0.32 0.20 0.20

Note: (*) UNIDO Industrial Statistics Database 2005 for agro-processing data with respective year. Note: (**) Source on Jaffee et al (2003) for agriculture and agribusiness share of GDP. Agribusiness combines the value added for agro-related industries and that of agricultural trade and distribution. Unweighted averages consider all information available in each column.

1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 0.0 2.0 4.0 6.0
Mostly Agriculture-based countries Higher correlation for low HDI countries Mostly Urbanized countries

Human Development Index - HDI

United States

Agribusiness-to-Agriculture Ratio
8.0 10.0 12.0 14.0

Source of data: Jaffee et al (2003) and Human Development Statistics (UN)

Employment statistics fragile. ILO estimates for formal sector and countries with official statistics around 22 million. Informality levels estimated at an average of 60%. Increasing levels of female participation (50>80% in non-traditional sector). Agro-industry (extended definition) important factor in rural non-farm employment and key stimulus for agriculture.

Food & Beverages Leather products and footwear 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Low-income

Tobacco Paper, wood and paper products

Textiles Rubber and Plastic products

Lower-middle-income

Upper-middle-income

Based on: UNIDO Industrial Statistics Database 2005.

Processed meat, fish, fruit, vegs & fats

1 0,9 0,8 0,7 0,6 0,5 0,4 0,3 0,2 0,1 0 High-income

Bakery, macaroni, chocolate and others

Dairy

Grains

Upper-middle-income

Lower-middle-income

Low-income

Based on: UNIDO Industrial Statistics Database 2005.

Food & Tobacco Beverages* Products*

Textiles*

Wood Products*

Paper and Rubber and Total Plastic Paper Manufacturing* Products* Products*

Agricultural Productivity**

LICs

5.280

25.270

2.437

3.716

4.737

5.865

5.020

344

LMICs

11.644

56.968

5.597

4.627

15.021

7.270

10.337

2.107

UMICs 21.753 169.130 13.787 11.836 27.761 19.056 23.529 5.126 Note: (*) UNIDO Industrial Statistics Database 2005 for agro-processing data with respective year, in current US$. Note: (**) Source on WDR (2008), data for 2001-2003, US$ 2000 prices.

Processed meet, fish, fruit, vegs & fats

Dairy

Grains

Others: bakery, macaroni, chocolate...

Food Processing Sector 4937 15083 18296 55408

LIC LMI UMI

3830 15941 18023

9418 21090 21855

6388 15587 29308

4395 10605 17919 61433

HIC 46675 71439 87569 Based on the UNIDO Industrial Statistics Database 2005

 80% of global food and beverage sales are processed products 60% of which are consumed in high income countries However growth in processed food consumption fastest in developing countries: 23% for HICs but 7% in UMICs, 28% in LMICs and 13% in LICs annually between 1996-2002 Shift in diet composition and towards convenience foods higher levels of sugars, fats and oils (health implications)

Source: Gehlhar and Regmi (2005), based on Euromonitor

Average annual grow th rate (1998-2003) Oils & Fats Breakfast cerals Ready meals Dried food Dairy products

LICs LMICs UMICs HICs

11,6% 8,1% 7,4% 0,2%

56,3% 12,3% 9,7% 3,3%

11,0% 10,1% 7,9% 4,7%

14,4% 10,9% 8,3% 1,8%

11,4% 9,7% 6,7% 2,9%

Source: Gehlhar and Regmi (2005), based on the Euromonitor, 2003.

Developing countries maintain same global agri-market share as in the 1980s (36% Aksoy, 2005) but trade composition has changed dramatically. However, small share of traded processed products in total food sales (10%) points to importance of FDI which has grown much faster than trade in last two decades Growing South-South trade and FDI but these are highly heterogeneous Trade, FDI or Global Value Chains (GVCs) ?

Developing countries 1980-1981 To developing countries To industrial countries 13,4% 24,3% 1990-1991 10,5% 22,4% 2000-2001 13,7% 22,4% 1980-1981 18,9% 43,4%

Industrial countries 1990-1991 14,5% 52,5% 2000-2001 15,6% 48,3%

Total 37,8% Source: Aksoy (2005), based on COMTRADE.

33,0%

36,1%

62,0%

67,0%

63,9%

Developing countries exports 1980-1981 1990-1991 2000-2001

Industrial countries exports 19801981 19901991 20002001

World exports 19801981 19901991 20002001

Tropical products Temperate products Seafood, fruits, and vegetables Other processed products Total
Source: Aksoy (2005), based on COMTRADE.

39,2 28,8 21,6 10,4 100

24,4 27,5 38,2 9,9 100

18,9 28,1 41 12,1 100

11,6 56,9 18,7 12,8 100

10,3 46,8 25,5 17,5 100

9,3 44,2 25,4 21,2 100

22 46,3 19,8 11,9 100

14,9 40,4 29,7 15 100

12,7 38,3 31 17,9 100

 SMEs crucial for employment and regional development and contribute significant share to total value added SMEs present in activities which escape the effects of scale and the demands of quality (informal sector) SMEs also in new niche markets, integrated into GVCs, or organized into clusters Opportunities for SMEs in artisan and origin markets

 From commodity to quality markets Between upgrading and race to the bottom Radical changes in dynamics of traditional exports Non-traditional exports: problems of access Increasing importance of commercial farm/wage (female) labour model

 Transformation in domestic markets of developing countries and impact of FDI Key role of informal sector from primary producer to catering Opportunities for consolidating subsistence crops as components of new urban diet Centrality of capacity building both for State apparatus and private actors

South-South trade, cooperation and FDI flows New dynamic of commodity markets Biofuels and new South-North trade New types of investors and new types of investment

 Energy: unprecedented expansion of largescale wage labour farming and increased opportunities for low input farming systems.

Global Warming: agricultural research priorities of developed countries may benefit developing countries

Institutional/regulatory climate: unacceptably slow but inexorable shift to post-commodity farming scenario in developed countries

Long term perspective of food price rises increases importance of promoting domestic agri-food systems