Opportunities and drivers for SME agribusinesses to reduce food loss in Africa and Asia

Abstract

Climate change, conflict, and the COVID-19 pandemic and its aftermath have caused a sharp increase in food insecurity globally. Reducing food loss - a decrease in the quantity and/or quality of food that takes place from production through to processing - in places where food insecurity is most severe has the potential to be a win-win for food security, climate outcomes, and for commercially driven agribusinesses. This report reviews the common drivers of food loss in sub-Saharan Africa and South Asia, which include inadequate storage, lack of cold chain, and poor post-harvest and distribution practices. It then highlights five technologies or approaches which have the potential to address food loss, and which are appropriate for agricultural small and medium-sized enterprises (agri-SMEs) operating in much of sub-Saharan Africa and South Asia, which face particular challenges (e.g. an unreliable electrical grid and fragmented value chains). Finally, the report highlights the main barriers to adoption and scale for these technologies and approaches, and identifies opportunities for governments, development partners, investors, and technology manufacturers to improve their uptake among agri-SMEs. The five technologies and approaches covered in this report are as follows: Decentralization of processing using solar dryers: The decentralization of primary food processing, in which some portion of value addition is undertaken close to the farm gate by farmers or SMEs, can have multiple benefits, including reducing food loss, lowering transport costs, and increasing rural incomes. Solar drying technology can enable this model, particularly in areas where there is a tradition of sun drying fruits and vegetables and there is a viable domestic or regional market for these products. Successful models typically involve an agribusiness off-taker who works with farmers and SME producers, providing technology and services (e.g., guaranteed off-take, training etc.) that ensure the production of high-quality produce. Hermetic storage (e.g. bags and cocoons): This maturing technology is increasingly available in local markets and represents a potentially easy-to-implement solution which could help to substantially address food loss during storage - where most loss occurs - for key staple grains. Cost and usage remain challenges for smallholders, with greater potential for small- to medium-scale traders and aggregators in rural areas with limited storage infrastructure. By creating a hypoxic environment around the produce, these solutions can achieve 100% insect mortality and reduce the growth of mould and aflatoxins. Bags are more appropriate for agri-SMEs involved in distribution, whereas cocoons (i.e. storage containers consisting of two plastic halves joined together by an airtight zip) are more useful for those storing large volumes for periods of six months or longer. Off-grid cold storage (e.g. solar-powered cold rooms): Innovative technologies and delivery mechanisms are still being tested in markets in India, Nigeria, and Kenya. Despite the high upfront cost, there are several examples of agri-SMEs and co-operatives achieving payback periods of as little as two years across a range of fruit and vegetable value chains, with returns driven by reductions in food loss and improved pricing due to better quality of the produce. Cooling as a service business models also offer the potential to reach smaller agri-SMEs and micro-entrepreneurs operating in informal rural and peri-urban value chains, but their application is limited to high-value crops that are generally out of the reach of the rural poor. Agri-ecommerce platforms: Agri-ecommerce platforms are a well-developed technology that aims to reduce food loss by improving the availability of information on market demand for farmers. Technology providers can also engage in logistics, warehousing, and quality control, taking collection of the produce from rural-based hubs, combining it at a central packing house, and delivering to urban retailers. Models of this kind have scaled more effectively in South Asia than sub-Saharan Africa, where they are constrained by poor road and logistics infrastructure. Waste-to-value approaches: Waste-to-value or circular economy approaches have the potential to reduce food loss by utilizing bruised or damaged fruits and vegetables which are unable to be sold as intended as inputs into other food products. Although the application of these approaches to the production of products such as condiments and oils is popular, they are unlikely to have a material impact on food security. However, models such as using black soldier fly larvae (BSFL) to produce animal feed (after consuming the food waste) are more promising, with a range of related technologies and business models operating in markets in both Africa and Asia. The main barriers to the success and scaling up of these technologies and approaches include a lack of knowledge and awareness of their commercial benefits, a lack of finance for manufacturers and agri-SME customers, a need for further research and development (R&D) and business model innovation (e.g. to bring down cost), and a lack of supportive policies and regulatory frameworks. Policymakers, development partners, investors, and the private sector can all play important roles in addressing these barriers.