Context

The many problems of poverty, low productivity, inadequate infrastructure and poorly integrated markets faced by developing countries are often exacerbated by an under-developed agro-industrial sector. Little attention has usually been paid to the value chain through which agricultural commodities and products reach the final consumers within the country and abroad. This neglect results in enormous potential losses of value added and employment opportunities. While high-income countries add US0 of value by processing one tonne of agricultural products, developing countries generate only US. Moreover, while 98 percent of agricultural production in high-income countries undergoes industrial processing, barely 30 percent is processed in developing countries. Yet, between 40 and 60 percent of manufacturing value added is generated by agro-processing industries in developing countries, and agro-industrial products are the major products exported from these countries, frequently accounting for half of all exports.

The process of globalization - involving global and regional economic integration driven by technological advances and trade liberalization and harmonization policies - presents both threats and opportunities for existing agro-based industries in developing countries and transition economies. The penetration of the market economy into formerly isolated and remote areas opens up opportunities for raising agricultural and agro-industrial productivity, but it also poses acute challenges, particularly for LDCs, where the agro-industrial sector faces increased competition and market volatility as a result. The same challenges are also faced by governments and support institutions, such as design and technology centres, professional associations, NGO's and private consultancy companies. They are required to make fundamental changes in policies, strategies, organizational linkages and the provision of skills to enable their agro-based industries to compete in the globalized markets, but often do not have the technical, human and information resources to be able to do so.

It is in this connection that the services offered by the Agro-Industries service module can make a vital contribution to the development of developing and transition economies, and especially to those of LDCs which typically have a predominantly agricultural and rural base. These services are directed at all principal stakeholders in the development of the agro-industrial sector, including public-sector decision-makers, support institutions and agro-related firms at all levels of the value chain, and are usually provided in close conjunction with related services offered by other modules. Since this service module is at the centre of the agro-industrial value chain, it serves to strengthen forward and backward agro-industrial linkages in order to raise productivity and increase the potential for promoting growth in value added and employment. The impact of this service module consequently has a strong potential outreach to poor and marginalized rural population groups, and is closely in line with several of the MDGs, in particular the eradication of extreme poverty and hunger.

The services offered by the Agro-Industries service module comprise a range of technical assistance interventions and know-how, which encompass the following key areas:

• Support and advice to official and private-sector decision-making bodies in various sub-sectors (food, leather, textiles, wood and agro-machinery) on techno-economic development options for strengthening the agro-industrial sector and fostering the equitable integration of small-scale agro-based enterprises into market-oriented agro-produce systems.
• Capacity-building at the institutional and industry levels to enhance industrial productivity and marketing performance in the agro-industrial sector. Particular attention is given to strengthening the capacity of technical support institutions and/or professional associations, as well as the creation of design centres and demonstration units for basic and advanced technologies (tools and machinery, CAD/CAM, automation, etc.).
• Support to traditional agro-industries to improve their productivity and efficiency, increase their integration into global value chains, and support rural livelihood diversity. This is achieved through upgrading of technical skills, process optimization, diffusion of appropriate agro-engineering systems, product innovation/diversification, and the introduction of working methodologies and guidelines, etc. Special attention is given to marketing support, such as participation in trade fairs and missions, as a means of exposing the target beneficiaries to market requirements.
• Participation in the work of international organizations and normative bodies, the promotion of research on priority/novel commodities, the preparation of training manuals and tool kits for agro-processes/technologies, and the dissemination of agro-industrial information for decision-making.

The commodities covered by the service module include food as well as important agro-based fibre products (wood, textiles and leather). In addition, special emphasis is placed on the agro-machinery and agro-chemicals sub-sectors because of their essential underlying contribution to the development of agro-based industries. In all interventions, cross-cutting environmental and social issues such as gender (i.e., specific equipment for women) and HIV/AIDS (promotion of labour-saving technologies), are built into the activities of the service module.

As indicated above, the Agro-Industries service module adopts close strategic linkages and complementary approached with several other service modules in the implementation of technical cooperation projects. Particularly close coordination is undertaken with:

• Service Module 3, Industrial Competitiveness and Trade, with special emphasis on Quality, Productivity and Conformity;
• Service Module 4, Private Sector Development, in particular with the SME Cluster and Networking Development, and the Rural and Womens Entrepreneurship Development programmes;
• Service Module 6, Sustainable Energy and Climate Change, on issues including biomass utilization and decentralized energy supply systems in rural areas (the concept of the multi-purpose platform); and
• Service Module 8, Environmental Management, specifically with services related to cleaner and sustainable production and agro-produce waste management
  

In addition, longstanding cooperation has been established with FAO, IFAD, UNEP, UNCTAD/ITC and other development agencies on project development and implementation, i.e., on hides and skins improvement and pollution control, sustainable forest management, product design and marketing. Further cooperation is also being developed with WHO, particularly in the area of community development where combined health and income-generation programmes are conceived for better livelihood.

Services provided and expected outputs

While the focus of this service module is generally on integrated interventions at the sectoral level aimed at strengthening, establishing or rebuilding value chains from producers to local, regional and international markets, particular emphasis is placed on the following areas:

(a) Product design and development

Product development links the marketing and innovation capabilities of companies with their productive potential and is thus the key to transform (indigenous agricultural) resources - available in most developing countries - into tradable commodities and products. Enterprises thus increase their competitiveness in both domestic and world markets and are enabled to actively participate in national, regional and global value chains. The product design and development function and related activities cover value creation (i.e., styling, design, construction and engineering) and enhancing the design quality of industrial products (i.e., selection of species; ensuring safety; improving characteristics; functionality; performance; appearance; packaging and supply management). In addition, the marketing competence of analyzing and responding to the markets on issues such as product requirements, competition potential, segmentation, branding, and effective communication of product values to consumers is also covered.

This is the most innovative part of any industrial operation leading to a stronger position in the ever-changing marketplace, thus ensuring stability and job creation in the manufacturing and service processes. The obvious benefits to developing societies include income generation, increased efficiency and utilization of resources (e.g., elimination of post-harvest losses), preservation of the environment (e.g., through waste minimization and cradle-to-cradle strategies), and energy (e.g., reduction of weight and transport costs), thus also effectively responding to environment- and energy-related non-tariff trade barriers. A main tool of product design is computer-aided design (CAD) technology, which is applicable even for micro and small enterprises.

In the context of product design and development, Service Module 5 offers access to essential information (current fashion trends, standards etc.), implementation of practical solutions and enhanced design and development methodologies, and identification and utilization of appropriate marketing channels. Specific areas of application of UNIDO product development services include:

• Product innovation and diversification for sustainable production and markets in all agro-based industry (sub)sectors, including innovations in industry systems (clusters/value chains) and industry-society relationships;
• Assisting associations in developing adequate food and product packaging, targeting post harvest losses and increasing trade potential, dealing with non-tariff trade barriers on packaging;
• Assisting enterprises in identifying and launching food products featuring modern requirements (natural character, calorie control, nutritional attributes, quality, reliability, consistency in substance and appearance, appealing packaging serving also logistics etc.);
• Promotion and product development in the field of silk, artisanal and technical textiles (especially agro-, geo-, medical- and automotive-textiles) through the establishment of appropriate design services and related centres;
• Provision of practical assistance in marketing of (semi-)finished leather and its derived products on global markets;
• Introduction and/or diffusion of fashion information, implementation of CAD techniques in styling, design (pattern engineering) and construction optimization in food packaging, textiles and garments, leather and leather goods, furniture and other wood and bamboo products, agricultural machinery production; and
• Facilitating market access and (international) competitiveness through marketing support to manufacturers of food stuffs, commodities made of fibre-based materials through finding niche products, adapting/developing them to consumer needs, integration in the global value chain.

Particular emphasis is placed on innovations for new uses of agricultural produce, waste or by-products, and their related technologies.

Some of the results of this service include:

• Higher value of leather products;
• Upgraded marketing capabilities resulting in an increased number of garments, shoes, leather goods, bamboo-based building components and furniture which are developed and offered for trade leading to higher export earnings;
• Higher value addition to natural fibres, such as silk, coir, cotton, jute, cameloid fibres;
• Enhanced international competitiveness of the wood and non-wood forest products (NWFP) processing industries;
• Higher level of value-added to forestry products and more sustainable use of natural resources;
• Farmers/entrepreneurs have access to efficient and quality agricultural equipment, thereby increasing their productivity and incomes;
• Increased availability in developing countries and rural areas of good quality income generation equipment with lower breakdowns and higher adding value potential.

(b) Technology centres

Competitiveness can be achieved only by industrial facilities operating at sufficiently high levels of productivity. However, the raising of manufacturing productivity is dependant, at least in part, on the deployment up-to-date production technology, which in turn requires the availability of appropriate institutional support facilities. Technology centres constitute physical and intellectual facilities of this kind, which are specialized in giving industrial firms such support. In particular, they are capable of identifying and transferring appropriate manufacturing techniques, providing technical assistance, generating and disseminating technical information, rendering specific services such as laboratory testing and quality assurance, and imparting training.

The actual form taken by such technology centres varies according to the economic and technical conditions of the host country and/or industry; they may be engineering bureaux, laboratories, training institutes (including universities), development centres, consultancy services, research and development (R&D) institutes or Research and Technology Development Institutes (RTDIs), or any combination of these. They may focus on one single sector (e.g., meat processing, textiles and garments, leather and its derived products, wood processing, agriculture machinery), or any combination (e.g., food, clothing). Geographical coverage may be only local, country-wide, regional, or global.

The prime objective of technology centres is to support the development of a specific technology in a given location or area by assisting manufacturers in maintaining their technological perfection, knowledge-base and capabilities required for successful operation. The impact of technology centres may be apparent in the form of increased economic benefits such as profit or export earnings, market share, employment, as well as environmental protection including working conditions and safety, all of which are measurable at the level of the plant or company. Similarly, these centres are closely related to enterprises and generate income through their services sold mainly to manufacturing establishments.

Typical activities undertaken in the context of this service comprise:

• Support and advice to relevant government bodies, professional associations and manufacturers on technology-related analyses to identify technical choices and related development options and elated policies and strategies following an integrated food processing chain approach. This includes strengthening the capacity of R&D and training institutions, extension departments, technology support and (vocational) training institutes to establish centres of excellence in various aspects of the food technology.
• Capacity building in the area of food hygiene and safety through implementation of Good Hygiene Practices (GHP) and Hazard Analysis and Critical Control Point (HACCP) systems in the food industry and establishment of food safety systems that are based on risk analysis and risk prevention, and traceability.
• Establishment and/or strengthening of professional education and training institutes; and technical development and information centres and their networks related to textile, leather, rubber and forest products (specifically NWFP).
• Re-engineering and cost-cutting programmes for efficient production flows and competitiveness.
• Innovation for sustainable production and markets with special emphasis on developing agro-based industries, including industry systems and industry-society relationships. Particular focus is placed on new uses of agricultural produce, waste or by-products, and related technologies.

Typical results of these interventions include:

• Enhancing the food value chain through ensuring compliance with the Sanitary and Phyto-Sanitary (SPS) and Technical Barriers to Trade (TBT) Agreements;
• Improved technical skills, especially for women entrepreneurs;
• (Sub)sectoral training and support centres contributing to increased employment and income in textile, garment, leather and leather products manufacturing;
• Transfer of innovative technologies to small businesses in the agricultural and food sectors enhancing their competitiveness and market access.

(c) Demonstration operations

This service of UNIDO provides direct and practical assistance to selected manufacturing entities with the purpose of replicating it throughout the national or regional industry or (sub)sectors. In accordance with the Organization's mandate, and in order to ensure active participation of the entire industrial (sub)sectors as ultimate beneficiaries, this service seeks to effect technology transfer in the most practical way, providing industrialists with an opportunity to implement the same (or similar) solutions.

Decades of international experience gained through technical assistance have shown that the most feasible way to introduce new or enhanced technologies is to demonstrate them under real conditions, i.e., through pilot operations. Demonstration or pilot units reveal the features and benefits of the proposed technology, exhibit in tangible terms the infrastructural and other preconditions needed for their application and provide prospective users with factual and authentic information and examples, thereby putting them in a position to take decisions on developing their operations as well. The given new or enhanced technology is implemented in real-life conditions and operated in a real production environment, with the objective of bringing about targeted business results. By definition, demonstration units are accessible to all interested parties to study their operation and results and learn operational skills. In other words, demonstration units serve to disseminate good manufacturing practices (GMP).

Examples of activities undertaken in the context of this service include:

• Assisting private enterprises through direct technical support for technology upgrading and for introduction of new technologies, implementation of GHP- and HACCP-based quality systems as well as implementation of demonstration and pilot operations and factory rehabilitation;
• Providing assistance and advice on: (i) Modern textile and garment production technologies to optimize production and minimize waste; (ii) dyeing and finishing through process optimization, introduction of computerized colorimetry and colour-matching to meet international standards and to reduce pollution, and, (iii) upgrading the African textile industry to benefit from the US-Africa Trade Bill - the Africa Growth and Opportunity Act (AGOA);
• Supporting enterprises to readjust during the phasing out of the Multi-Fibre Arrangement by up-grading of technical skills and technologies;
• Supporting, in close cooperation with Service Module 8 process optimization techniques contributing to a reduction of pollution, waste minimization and the utilization of by-products;
• Development of the bamboo industry through demonstration units and technology transfer, mainly based on South-South cooperation;
• Assisting the restructuring and rehabilitation of workshops and factory production lines delivering services for the design and manufacture of tools and machinery as well as industrial maintenance and the evaluation of agro-machinery;
• Upgrading of skills of rural artisans and blacksmiths through appropriate training and technology in repair and maintenance of basic agricultural tools and agro-processing equipment; and
• Establishment and/or strengthening industry associations as groups defending and communicating the interests of specific industries, while at the same time promoting the effective self-management of these associations.

Characteristic results achieved in this area comprise:

• Appropriate post harvest technologies leading to reduced losses and increased value-added as well as more sustainable use of natural resources;
• Improved competitiveness of industrial companies resulting in increased income and employment, particularly in rural areas;
• Process optimization leading to increased productivity and a better preserved environment;
• Improved technical skills particularly for women entrepreneurs;
• Increased access by farmers and entrepreneurs to efficient and quality agricultural equipment, thereby increasing their productivity and incomes;
• Generation of employment and income in remote rural areas for vulnerable groups;
• Enhanced skills of rural artisans and blacksmiths enabling them to produce standardized equipment responding to local needs;
• Development of appropriate physical infrastructure in rural areas for technology transfer and repair and maintenance of mechanization inputs;
• Demonstration and transfer of innovative technologies to small businesses in the agricultural and food sectors to enhance their competitiveness and ability to access wider markets;
• Reduced industrial pollution meeting main discharge parameters; and
• Strengthened professional associations.

(d) Techno-economic assessments

Techno-economic surveys and assessments of specific industrial (sub)sectors, both in national and international contexts, constitute indispensable preparatory activities for many developmental interventions. Given the essentially sectoral nature of the interventions carried out under this service module in the food processing, leather and leather products, textile and garments, wood and NWFP, and agricultural machinery and equipment industries, the conduct of such assessments form the core of the final service offered in this service module. The specific activities undertaken in this connection comprise:

• Auditing of food control frameworks and related regulations and assistance in establishing systems conform with international requirements based on risk analysis and traceability;
• Assessment of issues related to food technology and safety, and the development of food processing databases, technology-related guides and training manuals;
• Conducting regional and national techno-economic assessments to formulate support strategies for textile and garment producers as they readjust to the phasing out of the Multi-Fibre Arrangement;
• Sector reviews on topics such as secondary processing industries and the feasibility of bamboo plantations;
• Advisory services to promote and develop the Agro-Machinery Industrial Sector (AMIS) through an integrated techno-economic approach covering structured analysis, selection and introduction of appropriate technologies.

The applications of these techno-economic assessments include:

• The preparation of techno-economic studies for the revitalization of specific agro-industrial sectors, resulting in better industrial performance;
• The assessment of textile and garment industries in several developing countries to setting realistic objectives for their development;
• The maintenance of the UNIDO Leather and Leather Products Industry Panel to provide guidance on technical assistance programmes and maintain a worldwide network of technical institutions, professional associations, government agencies and private industry representatives;
• The maintenance of the Wood Industry Advisory Group to provide similar support for the wood industry.

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