USAID/Mozambique commissioned a value chain analysis (VCA) to prioritize and guide interventions within and across target value chains. The analysis targeted nine value chains, as summarized below:
- Oilseeds: Soybean, sesame, groundnut
- Pulses: Pigeon pea, common bean, cowpea
The analysis validates the selection of each value chain on the basis of its contribution to USAID/Mozambique’s objectives of increasing smallholders’ incomes and offering nutritional benefits to rural households, while also taking into account criteria such as its relevance to USAID target geography, impact on women farmers, market demand, and growth; and opportunity to develop market-driven interventions that build upon recent and current donor and private sector investments.
The analysis also provides an overview of the structure and functions of each value chain, identifies priority end markets and constraints to realizing their benefits, and recommends potential value chain upgrading strategies. The results provide a foundation on which more detailed intervention strategies can be developed.
The highest potential value chains, based on the above criteria, were soy, sesame, and pigeon pea. A second tier of value chains—groundnut, common bean, and cowpea—have high-potential benefits but lack the largescale “demand drivers” that mobilize broad-based investment and uptake of productivity-enhancing technologies and practices.
The lowest tier of value chains—banana, vegetables, and cashew—present significant agroecological, market, and/or political constraints that limit potential gains, or have investment requirements that preclude broad-based inclusion of smallholder farmers.
Major results are summarized for each value chain in turn, below:
Soy is a nutritious, but not traditionally consumed, crop in Mozambique. It is profitable for small- and medium-scale “emerging commercial” farmers, and there are examples of initiatives where women have been successfully integrated into different levels of the soybean value chain.
The domestic market for soy is estimated to be growing at about 60 percent per year, and about 60 percent of Mozambique’s domestic demand for soy is currently met through imports. According to the International Trade Centre’s (ITC) Trade Map, 2014 imports of soybean products totaled $28,281,000 of which 64 percent by value was soy bean oil (20,932 tons, mostly crude), 34 percent was soy cake (15,598 tons) and 2 percent was soybeans (715 tons).
The primary target end market for soy is the domestic market for animal feed. Animal feed producers are central demand drivers for the soy value chain. There is also also a domestic edible oil processing industry that utilizes the oil produced as a byproduct to feed production. More market research is needed, but there is a reported strong domestic market demand for edible soy oil.
Constraints include the relatively limited area of the country that is agroecologically suited for soy production, limited availability of quality seed, limited use of inputs such as inoculants, and weak farm management practices, which limit yields. Strategies to develop the value chain should focus on linking farmers (via their producer organizations) to large commercial buyers, and evaluating and promoting (based on the results) smalland medium-scale production models that will allow a large base of suppliers to operate profitably and sustainably in the market.
Groundnut production in Mozambique is dominated by smallholders, with women being very active in the value chain, including production. Groundnuts have high financial margins and are also highly nutritious, though high aflatoxin levels undermine their nutritional value.
Despite the existence of unmet demand in export markets, high levels of aflatoxins mean that most of Mozambique’s groundnut crop is consumed domestically. In addition to aflatoxins, poor domestic quality and weak sanitary and phytosanitary measures (SPS) certification capacity within Mozambique limit exports, as does inadequate domestic supply due to low yields and high post-harvest losses.
Addressing the aflatoxin problem is key to increasing the competiveness of the groundnut value chain. Additional upgrades include intensifying production and reducing post-harvest losses, promoting alternative shelling options, and facilitating aggregation models.
Development of the pigeon pea value chain offers strong potential for improving smallholders’ incomes and nutrition, particularly among women smallholders.
The primary end market opportunity for pigeon peas is seasonal (October–December) sales to India, as there are high seasonal price premiums during this market window. Indian demand for pigeon pea imports is expected to increase six fold by 2025.
A two-pronged value chain development strategy is recommended, focused on increasing production of pigeon pea and farmers’ access to markets. It will also be important to ensure a supportive policy environment that promotes pigeon pea exports through the removal of tax and administrative barriers.
Common beans are a profitable smallholder crop and a good source of protein and nutrients, and women are heavily involved in the value chain as producers, intermediaries, retailers, and end buyers. There is unmet demand for common beans to be sold domestically and to regional and overseas export markets.
Constraints include the fragmented and informal nature of the value chain, which limits incentives for farmers to invest in yield-enhancing technologies and management practices. The intervention focus should be on a dual-pronged strategy aimed at increasing farm-level production while enhancing farmers’ access to markets.
Cowpeas are centrally important to smallholder nutrition and food security, and more than half of households planting cowpea are headed by women. The crop is largely used for household consumption, with fewer than one farmer in 10 selling any of their cowpea production.
Overall, cowpea is not perceived as having dynamic market demand, and the private sector is generally lukewarm about investment in the sector given low demand and a weak and fragmented production base. While there are examples of donor-supported interventions (such as AgriFUTURO) that have engaged in the cowpea market, the multitude of constraints combined with the lack of dynamic market demand and catalytic demand drivers argue for the exclusion or de-emphasis of cowpea as a priority value chain for any future market-driven initiatives.
Cashew is a smallholder crop that plays a critical role in poor households’ livelihood strategies in Nampula and Zambezia where its production is concentrated. There are opportunities to increase farmer incomes from cashew production by addressing key constraints along the value chain; nonetheless, there are significant financial and political challenges to realization of these potential gains.
There is unmet demand for both unshelled and shelled cashew in overseas export markets; however, sales are limited by an unfavorable policy environment, inadequate production to meet demand, and difficulty meeting international market standards for shelled cashews. Other constraints include a lack of finance, particularly at the farm level; high costs along the value chain; and poor processing efficiency and quality.
A strategy to strengthen the cashew value chain should focus on improving the policy environment as well as increasing farm production of cashew by increasing smallholder access and utilization of inputs and services, and promoting medium-scale, block-style plantations. Complementary activities can be used to improve the availability of finance and upgrade industrial processors’ ability to comply with importing market requirements.
Banana is a nutritious crop frequently produced by smallholders throughout Mozambique for home consumption or sales at local markets.
Commercial activity in banana markets offers limited income potential for smallholder farmers. Domestic markets are easily glutted and have high price variability given the high perishability of bananas. Smallholder banana farmers are concentrated in Zambezia and Nampula where there is little irrigation and soils tend to be infertile. Banana plants extract high volumes of nutrients from the soil, making fertilization critical.
Export markets—both regional and overseas—have quality standards that smallholders would have difficulty meeting without extensive and costly technology transfer.
Vegetables are a nutritious product that offers significant income potential to smallholder farmers; however, barriers to entry to profitable market channels are high. Vegetables are produced by a significant share of Mozambican farmers, though they typically sell relatively small shares of what they produce. Female producers are under-represented in vegetable markets.
The most promising end-market opportunities are for fresh vegetables to substitute for imports in domestic markets and off-season production of traditional vegetables. Constraints to supplying these markets include limited availability of finance and farmers’ constrained liquidity given the capital-intensive nature of investment to enter these markets; the need for irrigation; limited availability of quality seed; limited technical and management capacity among farmers; and lack of post-harvest facilities.
Interventions to develop the vegetable value chain should be directed to higher-capacity farmers who are located in proximity to their target markets, have access to water, and have the capacity to bear the significant financial risk and investment requirements entailed in producing for these markets.
Interventions should be made in coordination with large-scale buyers of vegetables for the target markets and should be based on careful analysis of local market conditions and requirements. It is be critical that production increases are tightly coordinated to respond to demand in order to avoid local gluts that depress prices and exacerbate price fluctuations. Working through producer organizations can help to facilitate effective technology transfer as well as coordinating supply to avoid market gluts.