The ‘hidden middle’: the transformation of agri-food systems in Africa

There is an unrecognised but vast ‘hidden middle’ of private sector businesses operating in Africa between agricultural producers and food consumers. This is made up of a range of private actors providing transport, trading, brokerage, finance, storage, warehousing, processing and so on. This is neither ‘traditional’ (small, village based) nor ‘modern’ (organised, large-scale). These players facilitate medium-length value chains across a range of commodities that are in demand by (mostly) urban consumers, both in relation to inputs and marketed outputs of farm production. Studies show that this sector is under-recognised, but large and vibrant, and increasingly transforming agricultural value chains, generating value and employment across Africa.

Tom Reardon, lead author of the AGRA and IFAD reports that have highlighted this phenomenon so effectively, argued at a launch event:

The African food system is constrained…but we’ve found a quiet revolution at the grassroots level in African supply chains…. That is, in the segments that are closest to the farmer, made up of agro-dealers, truckers, processors, wholesalers and street vendors, among others. And it’s here, in the hidden middle, that rapid advancements are being made, with huge potential for growth.”

As the reports argue, “About 40% of non-farm employment is in “agri-food system” work, such as wholesale, logistics, processing, and retail. This means that about 25% of overall rural employment is in this work, making it crucial for rural families. It is especially important in peri-urban areas and in areas just beyond the peri-urban, the intermediate rural area, to women and youth.”

The role of ‘hidden middle’ entrepreneurs, connected in complex usually informal networks, is also vital for food security since around 80% of Africa’s food consumption is marketed and handled mostly through private operators. With the massive flow of often processed food to towns and cities (rising by 800% in 25 years across Africa) from diverse small-scale rural producers, there are many people involved. Unlike the assumptions of many policy proclamations, these reports argue that this is not a ‘broken’ value chain and there is no ‘missing middle’ to be filled by new interventions. Instead there is a vast, vibrant hidden middle, fostering a major transformation in food and farming systems across Africa.

While I am not convinced that the evolutionary schema offered by these reports – from traditional to transitional to modern – is useful, as there are many pathways of change, the recognition of this area of activity and calls for its support are important. Much of this is informal, improvised and constantly adapting to changing circumstances. Although the reports parse these arrangements as ‘SMEs’ – small and medium sized enterprises – I am again not sure about this nomenclature, as the ‘hidden middle’ is more complex and not easily categorised as a ‘sector’. While anathema to economic development planners, the multitude of small, networked, informal businesses linked to agriculture are the reality across most of Africa, and in many ways more suited to current conditions than the costly ‘modern’ alternatives favoured by many.

Transformations in Zimbabwe following land reform

Although in particular ways, this is also happening in Zimbabwe. The transformation is driven by increased (localised) production from land reform and new connections to growing urban centres. In the past, Zimbabwe’s dualist agricultural sector meant that value chains were either short and very local (‘traditional’) or long and export oriented (‘modern’), linked respectively to communal areas and large-scale commercial farms.

Today, with a tripartite agrarian structure (small, medium and large-scale farms) and 175,000 new land reform farms, there has been an explosion of economic activity that has responded to the new land ownership and agricultural production scenario. This is the hidden middle, which is driving (as elsewhere in Africa) a ‘quiet’ revolution, involving many mostly private players connecting farm production to markets.

We have been investigating this phenomenon across our sites (Mvurwi, Gutu, Masvingo, Chikombedzi, Triangle, Matobo) across three different commodities (maize, horticulture and poultry). We have been tracing actors along value webs/networks/chains, assessing profit margins, looking at the collaborations and competition, evaluating employment generation across activities, tracing rural to urban links, especially to small towns in our study areas, as well as discussing the constraints faced. As the blogs in this short series show, these new value networks are generating profit, providing employment, increasing efficiency, and through investment generated by this growing activity, are (slowly) upgrading.

Technologies (notably IT), infrastructure (notably roads) and finance (credit, mobile payments) facilitate this business activity, but lack of these (due to government policy neglect, macro-economic instability and so on – all big problems in Zimbabwe) can severely hamper progress amongst the multiple ‘hidden middle’ actors.

Another factor that explains the emergence of the ‘hidden middle’ is the new economic geography following the land reform after 2000. No longer are resettlement areas hidden away, often not connected to infrastructure and markets, as was the case with many resettlements following the 1980s land reform. Today land reform areas are central to the rural economy, connected to growing small towns and a range of businesses, commodity contracting and so on. Even those resettlements in far-flung parts of the country are also vibrant places of diverse activity as they may link to border exchange, profiting from trade and smuggling. Although investment in core infrastructure has been minimal in the past 20 years, these areas have had the opportunity for wider economic linkages, with growth being spurred in a huge array of non-farm activities, which are nevertheless linked to agricultural production.

Crucially, as the blog series will show, the functioning of these value networks is facilitated/constrained by social and political relations. In other words, we argue that it is vital to understand market relations as socially embedded, influenced by the social nature of networks and the degree of trust between actors. These are in other words ‘real markets’ operating not just by the laws of demand and supply, and so price incentives, but through social and institutional processes, governed by family social relations, church networks, political party affiliations and so on.

While a focus on the economics of these new arrangements is essential (as in most of the current literature), attention to these social and political elements is as important to understanding the ‘hidden middle’. As we discuss, this has major policy implications for fostering such activity in Zimbabwe.

This is the first blog in a short series on ‘hidden markets’. Thanks to Felix Murimbarimba and the team in Mvurwi, Matobo, Chikombedzi, Masvingo and Gutu for contributions to this blog.

This blog was written by Ian Scoones and first appeared on Zimbabweland

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