Who benefits from private sector investment in agriculture?

The connection between post-harvest loss reduction and the well-being of the urban poor

Every morning in Kampala’s sprawling slums hundreds of thousands of people wake to the aromas of tea and mandazi (fried dough) that emanate from the city’s ubiquitous street food vendors. By noon, narrow alleyways are lined with mothers and grandmothers in bright kitenge wraps who stand folded at the waist and tend to steaming pots of beans and posho (boiled maize flour) that sit precariously atop charcoal stoves. Each evening, children gather with siblings and caretakers to sip tea and pick roasted maize kernels from the cob. By nightfall, the streets again fill with hissing stoves and pots burping with peanut sauce and posho, Uganda’s primary staple dish.

As in other East African cities, food is pervasive in Kampala, from home-cooked meals that are prepared on the sidewalks of residential alleyways to the countless corner stores, restaurants, roadside stands, street hawkers, and open-air markets that stretch across the city’s seven hills.

What goes unseen to the casual observer is the absence of food in so many peoples’ lives there. Approximately 795 million people worldwide — one out of ten people on the planet — are food insecure, which means that they lack regular access to quality foods that meet their dietary requirements for a healthy and happy life.

Imagine for a moment what one tenth of our friends and neighbors around the globe might ponder each morning when they wake with an empty stomach: if I can afford only one meal today, shall I eat lunch or supper? Do I have enough money to pay the fees for my children’s’ lunches this week or must I pull them out of school? Should I send the youngest ones to eat with the neighbors again or will that further damage my reputation as a bad parent? Will I be able to earn enough cash today or will I have to pick scraps of food from rubbish heaps when no one is looking?

For those who live in urban areas (and can’t produce their own food), access to food hinges primarily on the family’s ability to earn enough money and purchase food in the market. The prices that urban consumers must pay — 2,400 Ugandan shillings (67 cents) for a kilo of maize flour, for example — are determined by how much it cost to produce, process, package, and transport the maize from the farmer to the point of sale. The cost of maize flour that urban consumers see can be magnitudes greater (e.g. triple the cost or more) than what rural producers receive for the unprocessed maize at their farm gate. Urban families pay for the value that is added to the final product at each point along the value chain, which includes everything from the planting of seeds the previous season to milling the flour to transporting it in convenient packages to urban retailers.

Urban consumers are also ultimately paying for food that never actually makes it to the market since so much food is damaged or lost between the field and the consumer. This so-called “post-harvest loss” has myriad negative impacts on local and global food systems: the loss of food quantity (volume) and quality (nutrient density and safety) negatively impacts the livelihoods and well-being of everyone in the system: subsistence farmers (whose food consumption hinges on farm productivity), producers (whose livelihoods depend on selling enough of their crops), and urban consumers (who end up paying higher food prices due to the removal of part of the food supply from the market), among others. There are also important environmental implications of post-harvest loss since land, water, and other non-renewable resources are used to produce and transport food that is never actually consumed. Although externalities like environmental degradation are rarely reflected in the sticker price that urban consumers pay, city-dwelling families effectively end up paying for all of the labor and inputs along the entire agricultural supply chain (e.g. seeds, herbicides, pesticides, irrigation water, land, fuel, and equipment) — even those resources that went into producing food that was lost between harvest and market.

The key to solving post-harvest loss is to identify and then make strategic investments to improve the efficiency of agricultural and food processing value chains. These investments will have the greatest likelihood of success if they are carried out through well-coordinated and logically sequenced efforts by multiple stakeholders, i.e. the private sector, public sector, community leaders, and others. These partnerships will become increasingly important as the private sector continues to position long-term social and environmental goals at the center of their core business growth strategies. There is an important business case for investing in post-harvest loss reduction efforts that will contribute to happier and healthier communities worldwide: the private sector wants to sell more foods that are safe and well-suited to the preferences of their consumers; the private and public sectors want a healthy and productive workforce; and communities want healthy and resilient families.

These stakeholders may have any of the following specific objectives: Estimate the expected return on their investments in post-harvest loss reduction; Strategise and plan how investments will lead to the greatest financial, social, and environmental impacts; Monitor progress to toward stated goals and change course or re-allocate resources as needed; and Evaluate investments to learn what works, demonstrate success, and build accountability.

The first step that these stakeholders must take is to identify how, when, and under what circumstances they can make the most strategic “upstream” investments in agricultural value chains that will lead to the greatest “downstream” improvements in well-being (e.g. social and environmental outcomes). For example, If Mars Inc., recognized for its commitments to mutually beneficial supply chains, wanted to determine the returns they could expect to see on an upstream investment in post-harvest loss reduction in the peanut value chain (by developing new equipment or improved systems) they might examine both the expected financial returns on their investment decision as well as the social impacts. Would investing in new drying and storage equipment end up reducing aflatoxin contamination (a dangerous toxin that results from poor storage methods) and thus contribute to the well-being and food security of people all along the peanut value chain? What are the positive gains that peanut farmers might see if they can sell more product and reinvest those profits into school fees, improving their children’s diets, and/or diversifying their livelihoods? Will peanut processors get healthier if they face less exposure to contaminated shipments of peanuts? To what extent will transporters benefit from having a steadier stream of work thanks to the increased volume of product (raw peanuts) that would have otherwise become lost between the farm and market? Will the wellbeing and food security situation of urban consumers improve if they can buy safer products at lower prices?

It is both challenging and extremely important to determine social impact because it involves accurately measuring things like well-being and food security that are not directly observable to the naked eye. There are four primary steps that we can take to do this, however:

1. Use your team’s internal knowledge resources and external literature to identify what has worked — and what has not worked — in the past with similar types of investments;

2. Map out the logical causal relationship(s) of how upstream investments in the value chain may affect people at each stage in the value chain or system;

3. Develop a comprehensive analytic plan that identifies what real-world information you need and how you will gather that information;

4. Gather, organize, and analyze the information to draw conclusions about what worked and what did not.

This enables us to determine how, when, and under what circumstances small upstream investments in the value chain will lead to big, measurable improvements in people’s lives. Those of us in the business of addressing the world’s solvable problems like post-harvest loss must go beyond our commitments to action — we must also hold ourselves accountable by measuring progress toward achieving positive social change.

Dr. Diana L. Caley, a social scientist and international development practitioner, is an Advisor in the Food Security and Monitoring, Evaluation, and Learning practice at Crown Agents USA, in Washington, DC. A Returned Peace Corps Volunteer (Morocco), she has carried out research and implemented development assistance programs in Egypt, Iraq, Mexico, Peru, Uganda, Tanzania, and Yemen. Dr. Caley holds a B.A. from George Washington University and a Ph.D. from New York University where she conducted original research on urban food insecurity in Kampala, Uganda. Her research and thought leadership focuses on urbanization and food security analysis for famine early warning systems, program targeting, and monitoring and evaluation. Through her advising, teaching, and technical training, Dr. Caley provides practical recommendations for analysts, program implementers, donors, researchers, and others on how to design and carry out practical analytic plans for measuring food security and other social phenomenon.