Overview

The agriculture sector is a national priority and is a source of income to more than 70% of the population. Further, the sector holds great potential due to Mozambique’s unused arable land amounting to 36 million hectares in addition to favorable agro-ecological conditions. However, Mozambique remains a net importer of food despite its high potential. Agriculture contributed to 26% of GDP in 2020. It is also estimated that production grew by 4% in between 2020 to 2021 due to favorable weather conditions, limited access to foreign foods imposed by lockdown restrictions, and increased government support.

In 2020, the government of Mozambique launched the SUSTENTA Initiative, a program supported by the World Bank, which aims to integrate rural households into sustainable agriculture and forest-based value chains. The total multi-year grant amount is valued at $500 million to support farmers with training, financing and improve supporting services. The Ministry of Agriculture reports that crop production increased from 14 to 16 million tons from 2020-2021 because of SUSTENTA. Furthermore, Mozambique’s promising mining and gas sectors, along with growing urban and middle-class populations, are fueling demand for local agriculture produce.

The government’s agriculture sector approach prioritizes supporting development and eradicating poverty. Most agriculture activity is conducted by smallholder farmers who receive support from the Ministry of Agriculture and Rural Development, foreign donors, and NGOs. Support ranges from supplying seeds, pesticides, and fertilizers to funding small grants. Most farmers lack advanced technologies and opt to practice traditional farming methods due to the unaffordability of commercial-scale equipment and uncertainty regarding offtakers – domestic or international – for any increased production. The sustainability of these enterprises is uncertain, and commercial-scale agriculture is still largely absent from the market.

There are a limited number of small and medium enterprises who run commercial-scale plantations. This group has witnessed growth due to agricultural schemes with contracts signed with large- and medium-sized processing and marketing companies. On the other hand, such enterprises are often challenged by inadequate water infrastructure, power outages, and inadequate storage and logistics infrastructure, resulting in massive food waste. Moreover, critics state that the agribusiness sector continues to be constrained by underinvestment, which has resulted in low productivity and hinders access to markets.  The Government of Mozambique is considering fiscal reforms designed to facilitate investment in the agricultural sector.

Most agriculture equipment is funded by international donors for purchase by the Ministry of Agriculture and Rural Development, which directs the machinery to smallholder farmers through farming associations and collectives and NGOs. U.S. equipment manufacturers often compete against European, Chinese, and Brazilian companies.

Leading Subsectors

• Sustainable irrigation systems
• Second-hand equipment and machinery
• Cold chain solutions, particularly in infrastructure and storage
• Ago-processing
• Packaging
• Agricultural inputs

Opportunities

Sustainable irrigation systems

Mozambique is extremely vulnerable to the impacts of climate change. Alternating flood and drought events cripple farmer’s ability to grow crops. Sustainable irrigation systems and water reservoirs reduce risks associated with climatic changes. Furthermore, only 90,000 of 3,000,000 hectares of arable land are being irrigated according to the International Journal of Water Resource Development.

Agro-Processing

Most food commodities, if not exported or consumed by the local market, end up turning into food waste. Smallholder farmers face difficulties in producing high quality and affordable products that meet adequate food safety standards. As part of Mozambique’s industrialization program, PRONAI, the government aims to set-up agro-industrial parks and establish 24 special economic zones for agriculture to increase domestic production of value-added products while selectively substituting imports. Additionally, it identified key subsectors, including horticulture, rice, soya beans, sesame, wheat, cashew nuts, maize, poultry and livestock, as key areas for development.

Financed by the African Development Bank, Mozambique will establish the Pemba-Lichinga Integrated Development Corridor Special Agro-Industrial Processing Zone. This project will be implemented over a 5-year period, starting in 2022, with a total cost of USD 47 million.

Cold Chain Logistics

Underdeveloped cold chain infrastructure compounds issues around food waste and food security, leading to a loss of market opportunities. There is a significant need for the development and implementation of cold chain logistics to enhance maintenance, transportation, storage, and handling, together with training and management in standards and best practices.

Inputs

Mozambique continues to experience alarming incidents of natural hazards that often threaten food security for vulnerable communities. Farmers are swiftly shifting to integrated climate-smart, nutrition-sensitive agricultural technologies and practices to promote productivity growth, build resilience, and achieve environmental and nutrition objectives.