• 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. “non-traditionals”) 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)

Agribusiness

Share of

GDP**(2)

Ratio

(2)/(1)

% Agro-

processing

sector in GDP*

% Food-processing

and beverages in

total manufacturing*

Agriculture-based Countries 0.39 0.22 0.57 0.050 0.468

Transforming Countries 0.16 0.32 1.98 0.040 0.224

Urbanized Countries 0.08 0.27 3.32 0.060 0.203

United States 0.01 0.13 13.00 - -

LICs 0.043 0.32

LMICs 0.055 0.20

UMICs 0.051 0.20Note: (*) UNIDO Industrial Statistics Database 2005 for agro-processing data with respective year.

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.

Note: (**) Source on Jaffee et al (2003) for agriculture and agribusiness share of GDP.

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0

Human Development Index - HDI

Agribusiness-to-Agriculture Ratio

Higher correlation for low HDI countries

Mostly Agriculture-based

countries

United States

Mostly Urbanized

countries

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.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Low-income Lower-middle-income Upper-middle-income

Food & Beverages Tobacco Textiles

Leather products and footwear Paper, wood and paper products Rubber and Plastic products

Based on: UNIDO Industrial Statistics Database 2005.

0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9

1

High-income Upper-middle-income Lower-middle-income Low-income

Processed meat, fish, fruit, vegs & fats Bakery, macaroni, chocolate and others Dairy Grains

Based on: UNIDO Industrial Statistics Database 2005.

Food &

Beverages*

Tobacco

Products*Textiles*

Wood

Products*

Paper and

Paper

Products*

Rubber and

Plastic

Products*

Total

Manufacturing*

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 & fatsDairy Grains

Others: bakery,

macaroni, chocolate...

Food

Processing

Sector

LIC 3830 9418 6388 4395 4937

LMI 15941 21090 15587 10605 15083

UMI 18023 21855 29308 17919 18296

HIC 46675 71439 87569 61433 55408

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: 2-3% for HICs but 7% in UMICs, 28% in LMICsand 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

Oils & FatsBreakfast

cerals

Ready

mealsDried food Dairy products

LICs 11,6% 56,3% 11,0% 14,4% 11,4%

LMICs 8,1% 12,3% 10,1% 10,9% 9,7%

UMICs 7,4% 9,7% 7,9% 8,3% 6,7%

HICs 0,2% 3,3% 4,7% 1,8% 2,9%

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

Average annual grow th rate (1998-2003)

• 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) ?

1980-1981 1990-1991 2000-2001 1980-1981 1990-1991 2000-2001

To developing countries 13,4% 10,5% 13,7% 18,9% 14,5% 15,6%

To industrial countries 24,3% 22,4% 22,4% 43,4% 52,5% 48,3%

Total 37,8% 33,0% 36,1% 62,0% 67,0% 63,9%

Source: Aksoy (2005), based on COMTRADE.

Developing countries Industrial countries

1980-1981 1990-1991 2000-20011980-

1981

1990-

1991

2000-

2001

1980-

1981

1990-

1991

2000-

2001

Tropical products 39,2 24,4 18,9 11,6 10,3 9,3 22 14,9 12,7

Temperate products 28,8 27,5 28,1 56,9 46,8 44,2 46,3 40,4 38,3

Seafood, fruits, and vegetables 21,6 38,2 41 18,7 25,5 25,4 19,8 29,7 31

Other processed products 10,4 9,9 12,1 12,8 17,5 21,2 11,9 15 17,9

Total 100 100 100 100 100 100 100 100 100Source: Aksoy (2005), based on COMTRADE.

Developing countries exports Industrial countries exports World exports

• 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 large-

scale 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