In Ethiopia, UNIDO is supporting the development of four Integrated Agro- Industrial Parks (IAIPs).

An agro-industrial park is an agribusiness development corridor integrating value chain actors with high-quality infrastructure, utilities, logistics, and specialized facilities and services to create economies of scale for sustainable market-driven agribusiness development and rural transformation.

The primary objective of agro-parks is to create investment opportunities in agribusiness. The IAIPs in Ethiopia also aim to promote the value addition of agricultural production through processing, manufacturing and storage of food, feed, and biofuel products; drive technological change; and spur industrialization of the agribusiness sector by offering premises and supporting services that connect value chain enterprises.

The IAIPs combine infrastructure needs, such as roads, power, water, sewage and telecommunications, with features to support agrifood processing, for example, open production zones, controlled environment growing areas, precision farming, research facilities, rural hubs, agri-infrastructure, collection centres, primary processing hubs and agri-marketing infrastructure.

They also provide specialized infrastructure such as cold storage, quarantine facilities, quality control labs, certification centres and central processing units. The IAIPs are supported by a network of rural transformation centres in a 100-km radius, which function as hubs for agricultural processing, sorting, grading and other pre-processing activities, credit and finance services, input supply, and market information provision, thus further assisting producers and linking them to markets.

There are currently three operational IAIPs, with 114 investors committed to the initiative. To date, 25 factories are under establishment, and out of which nine agro-processing investments are fully operational. These efforts have generated over USD 48.1 million in export revenue and created 2 297 factory-level jobs. Smallholder farmers have been increasingly linked to the IAIPs as suppliers, with 131 605 farmers engaged in 2022, 103 800 in 2023, and 39 992 in Q2 of 2024.

The Ethiopian Government is encouraging investment through various incentives, such as low land prices, incometax exemptions, duty-free imports for capital goods, and financial support from domestic institutions.

These interventions not only increase income for farmers, but also generate employment in non-farm occupations as demand for goods and services rises (Yeboah and Flynn, 2021). Special attention to the role of women and youth in the agricultural sector is essential for improved employment outcomes and broader structural transformation (Yeboah and Flynn, 2021). With the proliferation of agro-processing practices, tertiary education and the service sector will play crucial roles, creating decent job opportunities and greater income. The international acceptance of these public and private services is inevitable to maintain the competitiveness of the agrifood sector.

A study conducted in Ethiopia, Ghana and Tunisia in 2022 showed that while employment in agrifood processing accounted for only 5 percent of total employment in the food economy, the ability of the food processing sector to generate employment opportunities as a percentage of its growth was high, which therefore presents significant opportunities for employment and income generation (Kubik et al., 2022).

By transforming raw agricultural products into higher-value goods, farmers and local businesses can capture more of the final market price. For instance, processing tomatoes into paste or turning milk into cheese significantly increases the income of producers (Begimkulov and Darr, 2023). This approach not only boosts the financial returns for farmers, but also creates diverse employment opportunities in rural areas, ranging from low-skilled labour to high-skilled technical and managerial positions.

Brazil, the country that has experienced the most rapid mechanization progress in Latin America, accelerated its transformation through price interventions that removed anti-agricultural biases, leading to increased investment in agrifood processing. The region’s focus on enhancing agricultural productivity resulted in higher incomes for farmers and the creation of numerous jobs in the food processing sector, contributing to broader economic development and poverty reduction (Daum, 2022).

New opportunities have emerged to increase participation of agrifood SMEs in food processing across Africa (Nakitto et al., 2024). Many of these opportunities are in domestic and regional markets as processors respond to growing demand (Nakitto et al., 2024). In Senegal, for example, demand for ready-to-eat millet has increased processing of millet (Badiane et al., 2022).