Agro-industry and Smallholder Agriculture: Institutional Arrangements and Rural Poverty Reduction in Mozambique

INTRODUCTION: Agro-industry adding value to agricultural commodities through processing before they reach consumers can play a key role in agricultural development, especially if it is located in rural areas. In developing countries, agroindustrialization is increasingly driven by globalization , as manifested by foreign direct investment and trade (Reardon and Barrett, 2000) Mozambique is not an exception.. Some of the characteristics of this process, especially much more stringent standards for quality and food safety, may work to exclude many small farmers. Whether this happens, or whether the smallholder sector instead benefits widely from the process, depends on the type of agro-industrial investment taking place, and on the ability of government and the broader "development community" to assist these farmers to overcome the organizational and technical barriers to their beneficial participation.