eMKambo Vibes – 26 June 2017
Mastering the benefits of adding value to agricultural commodities Like many well-intentioned phrases, ‘value addition’ is not just an expression. It is a practice whose dynamics are yet to be fully understood and embedded, especially in African agriculture. More than 80 percent of agricultural commodities in developing countries are consumed in a raw state. Lack of modern value addition technology makes it difficult to convince people that processing agricultural commodities can create more employment than raw commodities. Informal food markets continue to employ more people than processing plants. While a lot of resources are being directed at adding value to agricultural commodities, there is insufficient evidence-based analysis of the inherent benefits, challenges and opportunities.
However, with adequate and appropriate investment, value addition can create more employment and lead to sustainable economic growth. In most African countries, raw commodities like vegetables, fruits and tubers move from farming areas to the market and then to households and finally into the toilet. This shorter route does not add much value to the economy compared to a much longer value addition journey where commodities move through more steps: farmer – processor – retailer – wholesaler- consumer. When commodities travel a shorter distance from production to markets and consumers, enormous pressure is exerted on monetary circulation because commodities are consumed before they complete their cycle along the value chain. Ideally money in circulation should effectively exhaust all stages from processing to retailing and consumption or end-use.
Benefits of a longer cash circulation cycle The speed and length travelled by money in circulation has to be long if it is to translate to Gross Domestic Product (GDP). An example of a long route is farmer – consumer –retailer – processor – trader 1