Transformation of the Agrifood Industry in Developing Countries - The Oxford Topic of Food, Politics, and Society - page 802

in low, lower- middle, and upper-middle income developing countries, much faster
thanGDPgrowthrates(GehlharandRegmi2005;WilkinsonandRocha2009).
The composition of the food processing sector also changes with income: the share
ofgrainsinprocessedfoodsectorvalue-addedisabout20 percentinlowerincome,
anddropsto15 percentinupper-andlower-middleincomecountries;theshareof
dairyclimbsfrom7 percentto10-13 percentoverthethreesetsofcountries;therest
is the share of processed meats, fish, fruits, vegetables, fats, and baked goods/noodles
(WilkinsonandRocha2009).
Finally, the great majority of processed food output and growth has occurred domes-
tically within developing countries, rather than in international trade networks.
Althoughprocessedfoodtradegrewquicklyuptothemid1990s,ithasstagnatedin
the15 yearsaterthat;atpresentonly10 percentofglobalprocessedfoodoutputis
traded(GehlharandRegmi2005).Ingeneral,littleofthefoodproducedorconsumedis
importedorexported: about3 percentofproduce,4 percentofmeat,and10 percentof
grain output or consumption of developing countries is exported or imported (Reardon
andTimmer2007).
First Stage of Transformation of Food Processing—Driven
Mainly by the Public Sector
Aswithwholesale,governments'efectsonprocessingtransformationcameviadirect
action and policy.
Although the topic has been important in urban food security debates for decades,
thegovernment'sdirectroleininducingfood-processingtransformationhasbeenlim-
itedinmostcountries,eveninitsheydayinthe1960s/1970s.Itwasmainlyconinedto
grainsoldtourbanmarkets.Inthatperiod,theurbanpopulationshareandthemar-
keted share of grain were lower than today. The local small-scale (and thus not para-
statal)shareofgrainprocessingwashigher.Andtheparallelmarket(notviaparastatals)
wasotenlargerthanthegovernmentchannels.herewasthenrapidprivatizationof
grainparastatalsinmostcountriesinthelate1980sor1990s.Onlyafewcountries'gov-
ernmentsstillhavesubstantialfoodprocessingoperationsintothe2000s.Forexample,
inAsia,itisonlyIndiathatmaintainsasubstantialpresenceviaitsgrainparastatal(see
BharatandRamaswami,thisvolume),whichprocuresonly20 percentofIndia'sgrain
output(and40 percentofthemarket).henumbersarefarlowerinotherAsiancoun-
tries(Rashid,Cummings,andGulati2007),andloweryetinotherregions.
Nevertheless, state policies had other effects. Policies cheapening credit increased the
scaleofplantinsomecountries(suchasinriceprocessinginIndonesia,Timmer1974);
regulations concerning hygiene and construction of slaughterhouses increased the scale
andformalizedlivestockslaughter.Inmanycountries(suchasPeru)importlicenses
were granted to a limited number of large feed mills and dairy firms to import yellow
corn, powdered milk, and so on, and, thus, de facto consolidated part of processing (for