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  • Publication | 2023

The Role of the ‘Hidden Middle’ for Agri-food Systems Value Chain Dynamics

Global Food and Nutrition Security

This paper analyses the role and importance of midstream actors in the agri-food value chain, drawing on experiences from cash crops, vegetables and fruits, animal-based products and food staples. Main attention is given to the value added (VA) captured and the employment creation by midstream actors. This provides insights into the efficiency aspects (resource use), the equity implications and welfare effects that result from these midstream dynamics.

The paper finds that commercial and modernizing value chains (VCs) for capital-intensive commodities generate higher midstream employment and value added. Demand-side motives are driving the midstream transition: urbanization and a favourable business environment support investment in inclusive and sustainable midstream activities. Higher midstream value added share are accompanied by a gradual increase in profitability. The interaction between both processes enhances overall attractiveness of midstream activities. Midstream capital investments are associated with a strict control of midstream agents over value added operations, even while several midstream processing activities are still fairly labour-intensive and therefore contribute to employment generation.