Policy Instrument:

Inclusive value addition and processing

Keywords: Market Access; Rural Development; Employment; Agroindustry; MSMEs; Infrastructure

Definition

This Policy Instrument refers to interventions, institutional arrangements, and investment strategies that enable a broad range of actors, particularly smallholder farmers, small and medium-sized enterprises (SMEs), women, youth, and marginalized producers, to participate in and benefit from the transformation, processing, and commercialization of agricultural raw materials.

Value addition involves transforming primary agricultural products into higher-value goods through activities such as cleaning, grading, milling, processing, packaging, storage, branding, or other forms of product differentiation. Processing may occur at different stages along agrifood value chains and can involve both primary transformation close to production areas and more advanced industrial processing activities.

Rationale

Agrifood systems are undergoing rapid transformation due to technological change, urbanization, evolving consumer preferences, and expanding regional and international trade. These dynamics create new opportunities for economic upgrading through value addition, agro-processing, and product differentiation across agricultural, livestock, fisheries, and forestry sectors. Value addition plays a critical role in rural development by increasing the economic returns to primary production, reducing post-harvest losses, generating rural employment, and stimulating the development of local agro-industries.

Constantly evolving and increasingly sophisticated food-markets offer vast opportunities for value addition by transforming or processing raw agricultural materials, including from livestock, fisheries and forestry. To do so, however, requires affordable and effective access to all the inputs, services and factor markets needed for this transformation, e.g., certified inputs, technical assistance, loans, output markets, center or cooperatives containing adequate processing machinery and technology.

Many do not have access and are, therefore, excluded from the opportunities which benefit only a select few. By taking a systems-approach, the binding constraints that determine this lack of access can be identified, which allows subsequently the design of targeted, and often sub-sector or value-chain specific policies that address the root causes of these constraints.

As the inclusion of disadvantaged groups in value addition in strategic sub-sectors is typically multifaceted, the interventions to promote inclusion must be holistic and tackle sets of constraints simultaneously, rather than address single constraints. These integrated interventions therefore will require coordinated efforts by a range of ministries.

This policy instrument is usually mentioned in and may contribute to the following national plans:

National and Subsector Development Plans
National Agricultural Investment Plans
National Food Security Strategies
Industrial Development Strategies
Food system pathways
Youth employment strategies
Humanitarian Response Plan

Institutional tools and development programs:

Value chain development programs
Cluster development programs
Local and regional Food Procurement Policy
EQuIP - Enhancing the Quality of Industrial Policies
The Global Industrial Policy Advice Facility (GIPAF)
Green Industrial Policy and Trade - A Toolbox

Examples of programs within WFP, FAO and UNIDO/Subcategories of Intervention:

UNIDO's Integrated Agro Food Parks for Rural Industrialization and Economic Transformation in Developing Countries: These parks contain three major facilities that complement themselves in the agro-production chain and broaden their coverage to reach even the smallholder settled in more peripheral areas: (i). Decentralized food collection centers in rural areas; (ii). Rural transformation centres; and (iii). Agroprocessing hubs.
Investment promotion programs (FAO’s Hand in Hand Initiative).
FAO & UNIDO's Agrifood Systems Transformation Accelerator.
The Global Industrial Policy Advice Facility (GIPAF).

Workers or entrepreneurs who lack access to input or output markets, including women, youth, small-scale producers and local processors, the poor, and Indigenous Peoples.

Key ingredients to success include:

Evidence-based design (in-depth analysis),
Systems approaches (to identify all critical constraints),
True multi-stakeholder partnerships,
Adaptation and detailed, regular measurement of impacts, and
Investing sufficient time and resources to allow for sustainability of the structural changes and impacts; moving too quickly and without sufficient understanding of root causes is the main risk.

c) support access to basic services (education, health, water and sanitation and housing), productive assets, appropriate technology (prioritizing low-carbon options), information, integrated social and economic inclusion programmes, skill building (including technical assistance and extension services in rural areas), financial inclusion, decent employment creation and access to safe, nutritious, and sufficient food (e.g.,home-grown school meal programmes) (SDG targets 1.4, 2.1 and 2.2), d) Contribute to addressing discrimination against women that leads to poverty, hunger and malnutrition such as differences in the prevalence of moderate or severe food insecurity between men and women, absence of women equal rights to economic resources, as well as of access to ownership and control over land and other forms of property, financial services, inheritance and natural resources, in accordance with national laws (SDG targets 5.a1 and 5.a.2), or contribute to recognize and value unpaid care and domestic work through the provision of public services, infrastructure and social protection policies and the promotion of shared responsibility within the household and the family as nationally appropriate (SDG 5.4), and e) target smallholder farmers (family farmers, forest dependent groups, fisherfolks, pastoralists) and among them those more likely to be left behind (e.g. women, youth, elderly, indigenous populations, communities which are land-locked or living in isolated areas, pastoralists, fishers, forest dwellers) with a view to increasing their productivity and incomes through secure and equal access to land, other productive resources and inputs, knowledge, financial services, remittances and diaspora contributions, access to credit and markets, including institutional markets, and opportunities for value addition as well as non-farm employment (SDG target 2.3) and promoting rural and territorial development

SDG 5 - Gender equality

Target 5.5 - Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic and public life.

SDG 8 - Decent work and economic growth

Target 8.5 - By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.

SDG 9 - Industry, innovation and infrastructure

Target 9.3 - Increase access of small-scale industrial and other enterprises, particularly in developing countries, to financial services, including affordable credit, and their integration into value chains and markets.

SDG 17 - Partnerships for the goals

Target 17.3 - Mobilize additional financial resources for developing countries from multiple sources.

Target 17.17 - Encourage and promote effective public, public- private, and civil society partnerships, building on the experience and resourcing strategies of partnerships.

CFS Principles for Responsible Investment in Agriculture and Food Systems (CFS-RAI)

Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security

CFS Policy Recommendations on Promoting Youth Engagement and Employment in Agriculture And Food Systems for Food Security And Nutrition

CFS Voluntary Guidelines on Gender Equality and Women's and Girls Empowerment (GEWGE)

CFS Policy Recommendations on Connecting Smallholders to Markets

CFS Policy Recommendations on Investing in Smallholder Agriculture for Food Security and Nutrition

Developing Sustainable Food Value Chains: Guiding Principles

Corporate Accountability for Food Systems Transformation