Overview

The agriculture sector is a national priority and a source of income for more than 70% of the population. It holds great potential due to Mozambique’s 36 million hectares of arable land, of which only 84% is under cultivation despite the country’s favorable growing conditions. Most agriculture in Mozambique is subsistence agriculture, with farmers producing food for themselves and their families, and Mozambique remains a net importer of food. The World Bank reports that services and agriculture composed 60% of total GDP growth in 2022. The sector will likely continue to experience continuous growth within the upcoming years due to greater investments in rural infrastructure, inputs, and agricultural research.

In 2017, the Government of Mozambique launched the SUSTENTA Initiative, a program supported by the World Bank that aims to integrate rural households into sustainable agriculture and forest-based value chains. The total multi-year grant amount, valued at $500 million, supports farmers with training and financing and will improve supporting services. Additionally, USAID’s Feed the Future program is investing more than $150M over five years to support market systems for agricultural inputs, such as improved seeds, and value addition in the agribusiness sector, as well as enhanced productivity, nutrition, and climate resilience at the household level. The geographic focus of the programming is on the north-central portion of the country (Nampula and Zambezia provinces). Moreover, the Millenium Challenge Corporation’s (MCC) second compact in Mozambique, a promotion package valued at $500 million from MCC and $37.5 million from the government of Mozambique, will go towards reforming institutions and policies to catalyze an inclusive agriculture sector, strengthen the investment framework, and provide seeds to smallholder farmers in Mozambique’s Zambezia Province. The compact’s rural infrastructure investment plan features rural roads and a 1.1-mile bridge spanning the Licungo River, maintaining a critical economic lifeline between the north and the south of the country.

The government’s approach to developing the agriculture sector prioritizes supporting development and eradicating poverty. Most agriculture activity is conducted by smallholder farmers residing in rural areas who receive support from the Ministry of Agriculture and Rural Development, foreign donors, and NGOs. Assistance 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-sized enterprises that run commercial-scale plantations. This group has seen growth due to agricultural contracts signed with large- and medium-sized processing and marketing companies or beneficial export schemes under bilateral agreements. 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 undertaking fiscal reforms 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
• Agro-processing
• Packaging
• Agricultural inputs
• 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 $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. The U.S. Government has made significant investments in supporting development and private sector engagement in certified seeds, which are seeing growing demand among producers at all levels, particularly for maize, soy, and legumes.