Agro-processing is one of the trends driving large scale private sector growth on the African continent. In fact, over 80% of value in the global food industry is in value-added components such as sorting, cleaning and packaging of agricultural products. So, if you want to start a business but not too sure which type, then Agro-Processing may be an option because apart from its low cost start-up, the profit margins are just as good.
Agro processing involves techno-economic activities applied to all the produce originating from agricultural farm, livestock, aqua cultural sources and forests for their conservation, handling and value-addition to make them usable as food, feed, fiber, fuel or industrial raw materials. A report by the International Trade Administration Commission (ITAC) of South Africa highlights the critical role that agro-processing plays in the manufacturing sector. Some of the growth industries identified in this report include the manufacture and export of wine, fresh grapes, animal feeds, breakfast cereals and non-alcoholic beverages. So, growing the agro-processing sector requires not only the diversification of products exported but South Africa in particular, will have to find new markets because one-fourth of its total exports of agro-processing products go to Botswana, Namibia, Mozambique, Germany, Netherlands, the UK, Zimbabwe, Zambia and Lesotho.
There are however, potential new markets that South Africa can target to export wine; these are China, India and Malaysia. There are also opportunities to export animal feeds to Ghana, Kenya and Uganda. Zambia, Malawi and Uganda also provide opportunities for breakfast cereals. Bearing in mind that the Industrial Development Corporation, (IDC)’s objectives is to invest in the development of projects and businesses that either create new or expand local manufacturing capabilities. The aim is to develop a competitive industry in the food, beverage, fibre, forestry and agro-derivative industries; that utilises and develops local and regional resources to supply domestic demand and increase participation in international trade.
According to the latest forecasts by the World Bank and the United Nations, Africa’s population is expected to reach at least 4.4 billion people by 2100. So, in order to satisfy the rising demand for food needed by such a fast growing population, food production in Africa will have to increase rapidly. Failure to unlock Africa’s agricultural potential will increase the number of undernourished people on the continent to 320 million by 2025 according to the African Development Bank.