Sub-Saharan Africa consuming higher-value processed foods

6th March 2015

By: Mia Breytenbach

Creamer Media Deputy Editor: Features

  

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A significant nutritional transition is taking place in sub-Saharan Africa, with a marked increase in the region’s consumption of higher-value processed foods, says analysis firm B&M Analysts chairperson Professor Justin Barnes.

The transition, which increases the demand for processed foods – in contrast to traditional unprocessed foods – is supported by a median population age increase locally and in sub-Saharan Africa, an increase of 10 years to 34 years.

“Therefore, aggregate food requirements will increase on a per capita income basis, with demand for higher-value processed foods also set to increase,” he says, adding that a per capita income increase will enable consumers to increase their caloric consumption.

Barnes believes that the aggregate 20% increase in food consumption for 2050 is likely to comprise protein-based food products and foods with a higher oil and fat content, instead of grain- and cereal-based foods.

This transition could be considered either healthy or unhealthy, based on the types of fats and proteins the population consumes, he adds.

Barnes highlights South Africa as one of the countries currently affected by this trend, with the country’s population reaching close to 60-million by 2050 – a 20% increase on the current population.

South Africa will, therefore, have to provide an additional 20% in food volume, says Barnes, citing B&M’s ‘South African and global food-processing trends: Development implications’ report, which was published and presented to the Department of Trade and Industry in 2012.

“Moreover, per capita income is projected to increase from the 2010 levels of $3 710 to $9 308 by 2050 – an increase of 151%. If this happens, the South African population will undoubtedly complete its nutritional transition.”

He adds that if the current population growth rates in Southern African countries are extrapolated and moderated, the aggregate of consumption will increase so substantially in the next 25 years that it will create an abundant set of opportunities, including export potential, for food processors and manufacturers in sub-Saharan Africa.

“Sub-Saharan Africa is currently in ‘takeoff mode’ regarding the nutrition transition. Therefore, the growth rate of highly processed-food consumption is going to increase faster than the per capita income growth in the economy. With this is mind, one would expect the processed foods market in sub-Saharan Africa to increase at close to double digits over the next few years,” he adds.

However, a key objective of the report includes analysts’ and industry’s aims to understand not only the processing portion of the food and beverage value chain but also where opportunities for job creation and value addition exist, Barnes explains.

Policy Review
Barnes notes that, while market opportunities for the food-processing sector are being realised across the continent, they are not being realised fast enough.

Nevertheless, he believes in the potential for a significant turnaround in future, citing several recommendations that B&M Analysts made in the report.

“Opportunity realisation could accelerate if there was an improved and sound regulatory alignment across the different sub-Saharan African economies,” Barnes stresses, noting that key challenges include, but are not limited to, a lack of regional market integration regarding the trade and legislation of processed foods, as well as sanitary standards.

It is critical that these barriers are reduced over time, as it would allow for market expansion and producer specialisation, subsequently enabling increased productivity, Barnes notes.

He suggests that the alignment of sub-Saharan African food policies, such as veterinary standards or pasteurisation processes, should ensure regional food safety and the optimisation of food- processing value chain opportunities to 2050.

“This would . . . simplify and rapidly increase trade . . . and reduce the cost for industry and manufacturers of accessing those markets.”

Another challenge currently facing the sub-Saharan African food and beverage industry is that tariff structures are not well aligned with food-processing opportunities.

“There are description ambigui- ties for various tariff lines carrying different duties and this lack of tariff alignment neither facilitates competitive input costs nor does it provide sufficient protection for finished goods producers,” Barnes points out.

He proposes a tariff review, conducted by government, to encourage higher-value food- processing activity and remove discrepancies that undermine market opportunities.

Further, Barnes highlights the importance of developing policies that increase local and foreign investment in the food-processing sector: “Industry and government need to enhance their investment in infrastructure, human resources, processes and products within the sub-Saharan Africa food value chain to comparable international levels.”

He adds that there has been a lack of investment in the food and beverage supply chain over the past decade, which could be attributed to a lack of market incentives, the difficulty of accessing the African market, material supply and access constraints, as well as local agricultural output that has not necessarily increased at the rate that it could have.

Value Chain
“Understanding the food value chain is critical, as it not only concerns the creation of a value- adding activity but also comprises important societal issues,” Barnes adds.

He explains that the local food-processing industry has the potential to create wealth for society because it is a value-added activity. The industry should, therefore, optimise processing opportunities in the country and explore opportunities in the broader African market.

Barnes further suggests that the industry should compile an aligned South African strategy with associated provincial strategies to provide a clear framework for the development of the local food-processing sector.

Meanwhile, B&M Analysts has conducted additional analysis for the sector to identify the longer-term opportunities, particularly in terms of imports and exports and which processed foods will have longer-term potential for export, either regionally or abroad.

“B&M has noted growth in the export of South African food products, with further growth expected in future,” Barnes concludes.

Edited by Samantha Herbst
Creamer Media Deputy Editor

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