Open access peer-reviewed chapter

Challenges and Measures to Recapitalise Handling of Postharvest Crops in Developing Countries

Written By

Ryusuke Oishi

Submitted: September 22nd, 2021 Reviewed: October 14th, 2021 Published: February 7th, 2022

DOI: 10.5772/intechopen.101222

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Abstract

Global population growth and environmental burdens have caused rising concerns regarding future food security. Contradictorily, many crops are discarded at postharvest stages without being consumed. Postharvest loss in developing countries is mainly attributable to a lack of capital and technology for food storage, processing (i.e. threshing, drying and packaging) and distribution. This study endeavours to investigate the causes and the potential measurements of postharvest losses in developing countries. Specifically, limited budgets in developing countries cannot finance the cost of capital investment; therefore, reliance on third parties such as international organisations is considered a realistic measurement. This investigation establishes that in some cases, a lack of knowledge and skills can result in a lack of full utilisation of the capital provided for handling post-harvest crops. Supporters are discouraged from providing development assistance in circumstances in which whether sufficient results will be achieved is unclear. This study emphasises that enabling the successful long-term utilisation of capital for postharvest handling is critical to improving the rate of vital crop loss.

Keywords

  • postharvest technology
  • storage technology
  • recapitalisation
  • development support
  • agricultural investment ratio
  • development flows to agriculture

1. Introduction

Recent years have brought about increasing opportunities to explore approaches for sustainability around the globe. With the ever-increasing global population and ongoing effects of climate change, addressing future food security has become a major challenge. This is also a major issue taken up by the United Nations. In particular, Sustainable Development Goal (SDG) 2 of the Post-2015 Development Agenda aims to ‘end hunger, achieve food security and improved nutrition and promote sustainable agriculture’ [1]. SDG 2 emphasises the improvement of food supplies in developing countries, stating, ‘Increase investment, including through enhanced international cooperation, in rural infrastructure, agricultural research and extension services, technology development and plant and livestock gene banks in order to enhance agricultural productive capacity in developing countries, in particular least developed countries’ [1]. Improvement in food supplies tends to be the focus of attention on ensuring food security; however, managing postharvest crops is also a critical issue. This research focuses on postharvest crop handling, analysing the current circumstances and proposing potential measures for improvement.

In many countries, a large number of crops are discarded at the postharvest stage. This occurs because many foods expire before being delivered to consumers. This challenge is considered to be particularly serious in developing countries mainly due to a lack of capital and technology for food storage, processing (i.e. threshing, drying and packaging) and distribution. Improvements in storage and processing technologies can delay spoilage, and efficient supply chain logistics can enable faster delivery of postharvest crops. The achievement of such improvements requires recapitalisation of postharvest technology; however, simply recapitalising postharvest technology will not improve the situation because local people in many developing countries often face difficulties with fully utilising modern postharvest technologies due to a lack of knowledge and capability. Moreover, when successful investment results (i.e. reduction in postharvest losses) are rarely realised, foundation bodies (i.e. international organisations and investors) are discouraged from providing funding in such countries. This analysis seeks to investigate and explain the cause of the circumstances in which the capital for handling postharvest crops is not fully utilised and how this affects foundation bodies’ decision-making on providing postharvest development support.

This chapter is organised into six sections. Section 2 presents an analysis of the current circumstances of postharvest loss, and Section 3 investigates the process of handling postharvest crops. In Section 4, the potential for improving the management of postharvest crops through recapitalisation is considered. Section 5 presents a theoretical analysis of capital investment for handling postharvest crops. In this section, we also study three successful cases of agricultural development support in developing countries. Section 6 analyses the agricultural investment and development in the least developed countries and the G20 countries. Finally, Section 7 concludes this study.

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2. The current circumstances of food loss at the postharvest stage

This section will analyse the current circumstances in which production is discarded in the postharvest stage. To formally analyse this situation, defining first the ultimate goal of global food security, as well as food loss and waste, is required. The Food and Agriculture Organisation (FAO) of the United Nations indicates that food security occurs when all people—at all times—have physical, social and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life [2]. Two main issues arise for securing food: improving the crop harvesting process and reducing postharvest loss. The problem with postharvest loss is especially serious, a large number of postharvest crops are discarded without being consumed. One study argues that solutions for reducing postharvest losses require relatively modest investment and can result in higher returns than increasing crop production to meet food demand [3]. Postharvest loss is divided into food loss and food waste. ‘Food loss is the decrease in the quantity or quality of food resulting from decisions and actions by food suppliers in the chain, excluding retailers, food service providers and consumers’ [4]. ‘Food waste refers to the decrease in the quantity or quality of food resulting from decisions and actions by retailers, food service providers and consumers’ [4]. In other words, food loss refers to the discarding of food before shipping, and food waste refers to discarding food after its shipping for reasons such as being unsold. The status of postharvest loss differs by country. Tables 1 and 2 present the amount of cereal product and loss (in 1000 tonnes) in the world’s least developed and G20 countries in 2019.1

CountriesMaize (product)Rice (product)Wheat (product)Maize (loss)Rice (loss)Wheat (loss)
Afghanistan1073523,6131625542
Angola2,76510330700
Bangladesh3,28854,4161,0992503,104238
Benin1,51045903781150
Chad438260236100
Ethiopia8,35014402523168
Madagascar2154,0300104030
Malawi2,698112652950
Mali3,6253,168121812721
Mauritania16232291722
Mozambique1,25013477551
Myanmar1,98427,574219086124
Nepal2,4735,152116248486195
Niger301021,958140
Rwanda41012054930
Senegal2647631133306
Sierra Leone23920011200
Sudan45304248
Uganda2,7731450175520
United Republic of Tanzania6,27324623738303
Zambia2,395431147223

Table 1.

Food products and losses in the world’s least developed countries in 2019.

CountriesMaize (product)Rice (product)Wheat (product)Maize (loss)Rice (loss)Wheat (loss)
Argentina43,4621,36818,53963353316
Australia38763520,94126209
Brazil82,28811,7495,4228,3211,181247
China257,349214,079131,69011,8068,6242,901
France12,6677335,7981123326
India27,820172,58099,7002,7854,6545,987
Italy6,1791,5126,933113449
Japan09,7287664190163
Mexico27,1702842,9434,57153197
Republic of Korea785,1952620548123
Russian Federation11,4191,03872,13611521433
Saudi Arabia45051892035
South Africa12,51031,900569085
Turkey5,70094020,000202302,133
United States of America364,26210,15351,39817,8643982,334

Table 2.

Food products and losses in the G20 countries in 2019.

As shown in Tables 1 and 2, food losses occur in both the least developed and the G20 countries2; however, the causes of food loss differ between them. Specifically, the main cause of food loss in the least developed countries is inadequate equipment and provisions for managing postharvest crops, whereas in G20 nations food loss is likely due to consumers’ excessive demands for food quality and retail stores’ sales strategies. For example, consumers in Japan demand excessively high food quality (i.e. consumers prefer to purchase attractive produce without pesticides); hence, much of the product that does not suit consumer preferences (i.e. slightly damaged or of an undesirable size) is discarded [5]. There are a large number of extremely competitive retail stores known as convenience stores in Japan that often overstock foods because they do not want to lose customers due to running out of food stock [5]. In contrast, due to insufficient capital for processing and preserving food in developing countries, fresh foods are rarely delivered to consumers. For example, most postharvest grains in developing countries are stored in traditional storage structures that do not prevent insect infestation and mould [3]. Although people try to make the best use of the food produced in developing countries, a significant amount of production is lost in postharvest operations due to a lack of knowledge, inadequate technology and/or poor storage infrastructure [3].

Section 2 analyses the contrasting circumstances of discarding postharvest crops in developed and developing countries. Based on the data investigated, a significant number of cereals are discarded in both developed and developing countries; however, the reasons for discarding differ. Specifically, in developing countries, cereals are likely to be discarded due to a lack of facilities for processing postharvest crops, which is considered food loss. Conversely, in developed countries, cereals are discarded due to consumers’ high-quality standards for food and retailers’ business strategy (i.e. overstocking of food), which is also considered to be food waste.

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3. Process of handling postharvest crops

As discussed in the previous section, the discarding of food in developing and developed countries is mainly due to food loss and food waste, respectively. This section focuses on the case of food waste. Postharvest crop processing involves several steps. First, the postharvest crops are cleaned.3 This process is usually accomplished mechanically in developed countries, whereas the same processes are done manually in developing countries. Consequently, the manual methods are less efficient than the mechanical means and are only able to process smaller amounts of postharvest crops. Manual work of threshing sometime causes postharvest crops to be in incomplete or damaged conditions, rendering some processed crops to be deemed inappropriate for sale. Second, many types of postharvest crops must be dried, as they originally contain water and cannot be stored for a long time without moulding unless the water content is reduced to an appropriate level. Similar to the process of cleaning, in developing countries, the drying process is usually done manually, whereas postharvest crop drying is mechanically processed in developed countries. In developing countries, postharvest crops are usually dried in the sun, whereas mechanical dryers are used in developed countries. Sun drying is easily affected by weather conditions, takes time and the amount of crops that can be dried at once is limited. Using mechanical dryers is a more efficient means to stably dry a large number of crops. Third, postharvest crops are stored in facilities. Securing postharvest crops in a storage facility is important for the stable delivery of large quantities of crops to retailers. Nevertheless, many grain storage facilities in developing countries are simple structures made from building materials such as wood, grass or straw. During storage, many stored crops are damaged by insects and mould, as no accommodations such as pest, temperature and humidity control are available. Finally, postharvest crops are delivered to retail stores. In developed countries, transportation operations are exceptionally efficient; crops are collected at distribution bases, finely sorted and delivered to various locations by delivery vehicles equipped with temperature and humidity control functions. Such crops are delivered without degradation of quality. Furthermore, most roads in developed countries are paved, making it easy for delivery vehicles to move smoothly and expediently reach destinations. This prompt delivery system ensures that crops are supplied to consumers in good condition. In contrast, the circumstances in developing countries differ widely from developed countries. The means of transportation is not limited to vehicles, but also carried via motorcycles or livestock. Of course, these means of transportation do not have temperature or humidity control functions. In addition, many roads are unpaved, slowing delivery, and vibrations often damage crops.

In addition to the above processes, studies also highlight the lack of market supply chains in developing countries. If producers do not have a dependable, expedient and equitable means of transporting crops to consumers, extensive losses can occur [6]. This circumstance is amplified by the lack of communication between producers and consumers [6].

As the above has established, significant differences exist between developed and developing countries in the process of handling postharvest crops. The ironic circumstances of food waste in developing countries suffering from food insecurity reveal that significant inefficiencies in postharvest processing in developing countries are based on a lack of capital and infrastructure.

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4. Improvement of postharvest technology in developing countries through recapitalisation

As noted in the previous section, insufficient capital and technology in developing countries cause the wastage of many crops at postharvest stages. This section considers various measures and attending challenges to improvement in developing countries. Specifically, capital investments are essential to the improvement of postharvest crop handling; however, such investments generally require a large sum of money, and producers in many developing countries cannot afford to cover such costs. Therefore, one of the most feasible approaches relies on development support through foundation bodies (i.e. international organisations or wealthy countries). The logical concern of foundation bodies is whether the expected result of support (i.e. reduction of postharvest loss in developing countries) will be sufficient to cover investment costs. If such development support does not adequately reduce the postharvest loss, the foundation bodies will consider the development support to have been unsuccessful. Some studies have noted that, although capital for handling postharvest crops is available, sufficient reduction of postharvest loss is not achieved. According to a study that conducted interviews with participants in Egypt, Indonesia, Kenya, Ghana and India, the simpler the postharvest technology, the better it’s chance of adoption, sustainability and long-term use, and the opposite is also true [7]. This is mainly because local farmers cannot fully utilise complicated postharvest technology that requires [7]. Moreover, extension services for farmers are shown to be effective in reducing postharvest losses of rice crops in Bangladesh [8].

It has also been reported that even if the capital is well equipped, the results from support will vary depending on how the farmers grow their crops. In the Ludhiana and Ferozepur district of Punjab, wheat harvesting losses are high during late harvesting due to the shattering of grains; hence, it is asserted that the farmers should be advised to undertake timely wheat crop harvesting to minimise harvesting losses [9]. Moreover, a significant number of horticultural crops in developing countries such as Ethiopia are wasted because most of these crops are produced by small-scale farmers with limited knowledge and financial sources [10].

In developing countries, crop prices are also volatile, and this volatility can affect investment outcomes. When making a capital investment for storage, if a crop is traded at a high price, the return on the investment exceeds its cost; however, if a crop is traded at a low price, the opposite is true and the capital investment is considered unsuccessful [11].

Some studies have argued that proper grading systems for postharvest food will help to reduce postharvest losses. For example, one study argues that better handling, packing and grading are needed to reduce postharvest grape losses in Pakistan, noting that if there are only grade ‘A’ grapes in a crate, the retailer will obtain much higher net revenue for the same price as multiple crates of poor grade grapes [12]. A research survey revealed that a crate had 17% damaged grapes, on average; out of which 11% was wastage [12]. Some studies have focused on crop packing to reduce postharvest loss. For example, one study endeavoured to design modified atmosphere packaging for postharvest mushroom storage [13]. The proposed packaging alters the normal composition of air to provide an appropriate atmosphere to decrease products’ respiration rate [13].

Some studies have attempted to reduce postharvest loss through supply chain development. It was confirmed that rice production capacity in Nigeria significantly improved to ensure food security; however, postharvest rice crops are not sufficiently distributed to consumers due to a lack of a postharvest management system [14]. The authors argue that technologies are available but are not in the hands of farmers and other actors in the rice value chain; thus, the dissemination of existing technologies for managing postharvest crops is required [14]. Another study argues that management of temperature and humidity (i.e. refrigerated transportation, cold storage at wholesale distribution centres, refrigerated retail display and cold storage at home) are essential for reducing postharvest crop losses [15]. The authors conclude that there are three steps to reduce postharvest losses: first, application of current knowledge to improve the handling systems of horticultural perishables (particularly packaging and cold chain maintenance); second, overcoming socioeconomic constraints, such as infrastructural inadequacies and poor marketing systems; third, encouraging consolidation and vertical integration among producers and marketers of horticultural crops [15].

As noted, postharvest losses in developing countries occur due to a lack of capital investment for infrastructure to handle postharvest crops; however, simply providing capital does not always reduce postharvest losses, as there are multiple issues to consider. For example, if the installation accommodated by capital is not fully utilised, reduction of postharvest loss will not be achieved. To do so, local producers must be trained to make full use of the equipment and supply chain improvement is also necessary.

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5. Theoretical analysis of capital investment for handling postharvest crops

This section presents the economic theoretical model illustrating the circumstances of capital investment for managing postharvest crops in developing countries. Because many of this chapter’s readers are assumed to be unfamiliar with these constructs, a simple theoretical model was formulated. As established, the development of facilities with sufficient functions is necessary to reduce postharvest losses; however, budget constraints render many developing countries unable to afford the construction of such facilities. Subsequently, development support from foundation bodies (i.e. international organisations and investors) presents a realistic financing method. To encourage this development support, sufficient outcomes (i.e. reduction of postharvest losses) are required; however, as discussed in Section 4, some capital investments for managing postharvest crops in developing countries are not achieving the expected results (i.e. postharvest loss has not decreased as much as expected). Additionally, we also provide case studies of agricultural development support from a government organisation, a non-government organisation (NGO) and foreign direct investment to the developing countries. The case studies are compared to the theoretical analysis to consider the factors behind its successes.

5.1 Illustration of circumstances in which invested capital is not fully utilised to handle postharvest crops

This subsection introduces a theoretical illustration of the circumstances in which invested capital is not fully utilised to reduce postharvest losses. This circumstance can be illustrated by the following setup.4

Y=LαK1αE1

where Yis postharvest crops delivered to consumers without being discarded, Lrepresents the number of labourers handling postharvest crops, Kis the capital invested to handle postharvest crops and αmeasures the dependence on Lto produce Y.5Eq. (1) indicates that postharvest crops are handled by Land Kand a higher Yindicates less postharvest losses.

By differentiating Ywith respect to Lresults in the following equation:

YL=αKL1αE2

Eq. (2) measures how much Yincreases when 1 unit of Lis added. This equation has some notable features. According to Eq. (2), YLis positively related with KL; thus, the larger the size of Kand the smaller the size of Lleads the larger the size of YL. This implies that when there is an insufficient number of labourers and substantial capital, some capital will be unused. In such circumstances, additional labour will significantly improve productivity. In contrast, if there is insufficient capital and a large number of labourers, additional labourers will be unable to leverage capital to produce Y. Furthermore, if the postharvest crop handling depends excessively on labourers, αwill be close to 1; hence, YLbecomes a larger value. Conversely, if the postharvest crop handling depends excessively on capital, αbecomes close to 0, then YLbecomes close to 0.

By differentiating Ywith respect to K, the following equation is generated.

YK=1αLKαE3

According to Eq. (3), YKis positively related with LK; thus, a larger size of Land smaller size of Kleads to a larger size of YK. Moreover, if αis close to 0, YKbecomes the larger value. Conversely, if αis close to 1, YKwill become close to 0.

Considering the relationship between α, YLand YK, the production process appears to depend excessively on one input (i.e. Lor K), and adding a few dependent inputs (i.e. Lin the case of small αand Kin the case of large α) does not increase production as expected.

Due to lack of sufficient knowledge and skills, even if high-performance equipment for managing post-harvest crops is installed, farmers are unable to fully utilise it. This circumstance reflects a case of αalmost equalling 1. As was demonstrated, when α1, YKbecomes close to 0. Thus, capital investment for the management of postharvest crops does not significantly improve the situation. To improve this circumstance and sufficiently reduce the loss of postharvest crops with the capital investment, production must be processed with a smaller value of α. This is only possible when labour is capable of utilising the capital.

5.2 Funding Body possible when under outcome uncertainties from development support for reducing postharvest losses

As illustrated in Subsection 5.1, if labourers are unable to utilise the capital for handling postharvest crops, increased capital does not reduce postharvest losses. This subsection analyses the process of the funding body vest crops with the capital investments. An additional theoretical setup is introduced as a part of this analysis, partially referring to the equations in the previous subsection. The setup assumes two time periods (t=1and2).6 The funding body expects the provision of development support to increase K, which will cost C. If the support is provided at t=1, Kis enhanced at t=2; however, improvement of postharvest management depends on how much the labour can utilise the invested capital, which is assumed by two potential values of Yat t=2, represented by Y1and Y2, which satisfy a condition of Y2<C<Y1. Y1indicates that development support can sufficiently contribute to reducing postharvest losses, whereas Y2indicates that the cost of development support exceeds its contribution. A chance of having Y1is probability Pwhere 0P1, and Pis inversely related to α. Finally, the model uses a risk-free rate rto discount the values at t=2to t=1.7 This is illustrated below in Figure 1.

Figure 1.

Outcome from development support for reducing postharvest losses.

A present value of expected outcome EOfrom the development support can be calculated as follows.

EO=P×Y1+1P×Y21+rE4

As it is clear from Eq. (4), the size of EOdepends on, and Pdepends on α. From the funding body’s perspective, development support is not worth providing unless it can contribute to sufficiently reducing postharvest losses. To investigate the decision to provide development support, this study uses the return on investment (ROI) shown in Eq. (5).

ROI=EOCCE5

The funding body decides to provide development support when ROI>0, and the opposite is true in the case of ROI<0.8 As is clear from Eq. (5), ROIis positively related to the size of EO; hence, when αis sufficiently reduced, the development support is provided.

Summing up the above analysis, if labour does not have enough capacity to utilise the invested postharvest technology, the funding body forgoes development support.

5.3 The case studies of capital investment for handling postharvest crops

In Subsections 5.1 and 5.2, we theoretically demonstrated the situation where invested capital is not fully utilised to handle postharvest crops and the funding body’s judgement under outcome uncertainties from development support for reducing postharvest losses. In this subsection, we analyse the three successful cases of agricultural development support from the government organisation, NGO and foreign direct investment to the developing countries. We compare the cases and the theoretical model to consider the factors behind the success of the cases.

5.3.1 Post-harvest handling and storage (PHHS) project in Rwanda

First, we try to consider the successful case of the government organisation (U.S. Agency for International Development (USAID)).9 USAID is managing PHHS Project carried out between September 2009 and August 2013, which budgeted 8.3 million US dollars [17]. The PHHS project is to integrate local farmers into commercial marketing channels as a way of driving investment in postharvest technology and process improvements for maize, beans and rice in Rwanda [17]. According to the report, the agricultural products are fragmented in Rwanda due to a lack of the farmers [17]. According to the report, the agricultural products are fragmented in Rwanda due to lack of the farmers’ capital and know-how to efficiency harvest, store and market their surplus yields [17]. This situation is reminiscent of the case of having a high level of αand low level of Kin Eq. (1) (i.e. there is a lack of capital, however, because the production process is overly dependent on labours, increasing capital cannot be expected to reduce the postharvest loss significantly). As was demonstrated in Subsections 5.1 and 5.2, one of the measurements to overcome the situation is reducing the value of αin Eq. (1) by improving the skill of local farmers. The latter can be achieved by providing training for local farmers. As a part of the PHHS project, the training for technical and business practices in postharvest handling are provided [17]. The training can be considered to help the local farmers to effectively utilise the capital to manage the postharvest products.

Additionally, we also pay attention to the funding process of this program. PHHS set an objective to mobilise private investment and bank finance to develop businesses that require storage infrastructure [17]. Such funding bodies are like the one illustrated in Subsection 5.2, which dislikes uncertainty of outcomes. If there is no intervention of PHHS, the private funding bodies would be discouraged to fund the project, because they can hardly expect its succession. However, the intervention of PHHS helps the private funding bodies to understand the project and expect αin Eq. (1) to be reduced. This is to alleviate the asymmetry of information, which is a barrier to undertaking financial transactions.

As a result of this project, 104 storage centres were constructed or rehabilitated and over 60,000 farmers were trained in postharvest handling and storage best practices [17].

5.3.2 Sasakawa Africa Association (SAA)’s Activity in Africa

In this subsection, we consider the case of the NGO called SAA that provides agricultural development support in Africa.10 Although SAA is an NGO, they have a large financial resource and can provide sufficient assistance for the agricultural development in African countries [18]. SAA organises its operations under five key themes, and one of them (i.e. Theme 2) is to promote postharvest handling and agro-processing in African developing countries [18]. Their activity is diversified to many countries. For example, SAA launched a project in Tanzania to promote improved grain storage, both on the farm and also in the form of communal storehouses [18]. Moreover, at several locations in Tanzania, organised farmer groups were linked to credit institutions that would provide short-term loans against grain held by the associations in bonded warehouses [18].

The projects of SAA and USAID is in common with emphasising human resource development (training) in addition to providing financial support and capital constrictions between 1989 and 1995, about 1,000 of the country’s 5,000 government extension workers received crop management training from Sasakawa-Global 2000 staff. Such training leads to lowering the value of αin Eq. (1).

In addition, rather than providing all the financial support, SAA and USAID tries to act as a bridge for transactions with other financial institutions and makes efforts to attract further investment.

Providing funding support to farmers in developing countries is accompanied by the risk due to the lack of available information and the uncertainty of future outcomes. If a prominent NGO like SAA act as a bridge, investors’ anxieties will be alleviated and the problems shown in Subsection 5.2 will be resolved.

5.3.3 China’s overseas investment in agriculture

Unlike the case in Sub-subsections 5.3.1 and 5.3.2, some countries encourage private investors to provide agricultural development support to the developing countries for a purpose of meeting their own needs. For example, China has promoted to increase overseas foreign direct investment (OFDI), and a large portion of OFDI is devoted to agricultural support in developing countries [19].

China is one of the major producers of agricultural products in the world; however, the contribution of agriculture to their GDP has dropped considerably over the past three decades [19]. This is mainly due to China’s remarkable economic growth that has led to industrialisation. As a result, China faces a challenge in sustaining the self-sufficiency of agricultural products and increased import of agricultural products from other countries [19]. Especially, in recent years, China has emphasised ties with ASEAN, and OFDI to Cambodia, Myanmar and Laos is increasing [19].

In Cambodia, many Chinese firms are directly involved in the development of plantations [19]. As a result, the export of rice, cassava, sugar and cocoa from Cambodia to China has significantly increased from 2012 to 2015 [19]. Similar to the case of Cambodia, the export of maize, rice, beans and oilseeds and tea from Laos to China has significantly increased [19].11

Similar to Sub-subsections 5.3.1 and 5.3.2, in this case, a large amount of capital was injected into the agricultural industry in the developing countries through OFDI from China. However, the report also points out some challenges in local work sites. For example, communication and consultation with local people are often challenging for foreign investors, and having lack of information flows causes distrust between foreign investors and local people.

As can be seen from the case studies in this section, there are some successful trials for providing agricultural development support to farmers in developing countries. The trials are operated by many types of organisations (i.e. government organisations, NGOs and private investors). One of the reasons for the success of these trials is that they provide comprehensive support such as training local farmers through agricultural development support. Moreover, by eliminating information asymmetry between investors and local farmers causing concerns about uncertainties of investment, the organisations help local farmers to obtain loans from private financial institutions.

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6. A comparison of agricultural investment ratio (AIR) and development flows to agriculture (DFA) between least developed and G20 countries

Section 5 theoretically demonstrated that even if the capital for handling postharvest crops is increased, reduction of postharvest crops will not be achieved unless local labourers can fully utilise it. In addition, we considered the cases that succeeded the agricultural development support in the developing countries by providing comprehensive support such as training local farmers. However, such successful support is limited to the small number of cases, and many developing countries do not receive effective support. This section presents a comparative investigation of data regarding AIR and DFA to overview agricultural developing support in developing countries around the world.

6.1 A comparison of AIR between least developed and G20 countries

This subsection comparatively analyses the AIR values in the least developed and G20 countries. The AIR value is calculated by dividing the ‘Agriculture Gross Fixed Capital Formation’ (Domain code CS, Element code 6110 and Item code 22030 in FAOSTAT) in country iat time tby ‘Agricultural Value Added’ (Domain code MK, Element code 6110 and Item code 22016 in FAOSTAT) in country iat time t.12 The AIR value indicates how much of the total factor income is reinvested in new fixed assets in the agricultural industry of the respective country [20]. Table 3 demonstrates the AIR value in the least developed countries in 2018 and 2019.13

CountriesAIR (2018)AIR (2019)
Afghanistan0.060.05
Angola0.10.14
Bangladesh0.090.1
Benin0.040.04
Bhutan0.110.13
Burkina Faso0.070.08
Burundi0.040.04
Cambodia0.090.09
Central African Republic0.040.02
Chad0.060.07
Comoros0.070.07
The Democratic Republic of the Congo0.050.05
Djibouti0.070.07
Eritrea0.220.23
Ethiopia0.070.07
Gambia0.040.03
Guinea0.120.13
Guinea-Bissau0.050.04
Haiti0.060.06
Kiribati0.040.04
Lao People’s Democratic Republic0.090.1
Lesotho0.080.09
Liberia0.040.05
Madagascar0.050.05
Malawi0.040.04
Mali0.070.07
Mauritania0.110.12
Mozambique0.050.05
Myanmar0.110.1
Nepal0.060.06
Niger0.020.02
Rwanda0.070.07
São Tomé and Príncipe0.050.04
Senegal0.090.08
Sierra Leone0.050.07
Solomon Islands0.090.1
Somalia0.050.05
Timor-Leste0.110.11
Togo0.040.04
Tuvalu0.080.06
Uganda0.080.08
United Republic of Tanzania0.070.08
Vanuatu0.130.13
Yemen0.10.1
Zambia0.110.08

Table 3.

AIR in the least developed Countries in 2018 and 2019.

Table 3 demonstrates that most AIR values in the least developed countries are less than 10%. This low percentage of AIR indicates that a small portion of the total factor income is reinvested in new fixed assets in the agricultural industry of these countries. In addition, since no remarkable increase in the AIR is seen from 2018 to 2019, these countries are likely to continuously record low AIR. This indicates that the agricultural capital in these countries is inadequately structured. There are various possible causes for this situation; for example, in developing countries, various areas other than agriculture (i.e. medical care and education) are underdeveloped and are often prioritised, minimising the amount of funding available for agriculture. Table 4 presents the AIR in G20 countries in 2018 and 2019.14

CountriesAIR (2018)AIR (2019)
Argentina0.140.15
Australia0.260.36
Brazil0.150.15
Canada0.210.2
China, mainland0.130.14
France0.290.29
Germany0.440.36
India0.130.12
Indonesia0.160.15
Italy0.230.2
Japan0.240.25
Mexico0.030.03
Republic of Korea0.160.19
Russian Federation0.220.19
Saudi Arabia0.10.11
South Africa0.210.25
Turkey0.160.17
United Kingdom of Great Britain and Northern Ireland0.40.42
United States of America0.380.39

Table 4.

AIR in G20 countries in 2018 and 2019.

The data reported in Table 4 differs from that of Table 3. Specifically, all the AIR values in Table 4 exceed 10% and some exceed 40%. The G20 countries have strong national power and can invest large sums in agriculture. Moreover, the existing facilities are far more substantial than the least developed countries. Furthermore, many of the AIR values in 2019 do not differ largely from those of 2018, indicating that these countries are constantly recording the high value of AIR.

6.2 A comparison of DFA between the least developed and the G20 countries

The least developed countries do not have adequate funding for sufficient capital investment in the agricultural sector. Agricultural capital investment in the least developed countries relies on development support from funding bodies as one of the most realistic means. Table 5 presents the DFA (in millions of US dollars) from the international organisations to the least developed countries.15

Organisation (donors)DFA (2018)Number of recipient countries (2018)DFA (2019)Number of recipient countries (2019)
Adaptation Fund19.93
African Development Bank (AfDB)322.611426.818
Arab Bank for Economic Development in Africa (BADEA)19.32
Asian Development Bank (AsDB)331.17669.28
Climate Investment Funds (CIF)14.61
European Union Institutions409.511127.68
Food and Agriculture Organization of the United Nations (FAO)15.946
Global Environment Facility (GEF)42.1845.617
Green Climate Fund64.8296.86
Inter-American Development Bank (IDB)0.81
International Bank for Reconstruction and Development (IBRD)199148
International Development Association (IDA)856.620
International Finance Corporation (IFC)62.46
International Fund for Agricultural Development (IFAD)859.836
Islamic Development Bank (IsDB)364.4142018
OPEC Fund for International Development (OFID)105.76164.88
United Nations Development Programme (UNDP)0.640.63

Table 5.

DFA to the least developed countries from international organisations.

There are many international organisations in the world that support economic progress in developing countries. Table 5 reveals that DFA is allocated by international organisations to the least developed countries; however, there are differences in the number of recipient countries, the size of DFA varies among international organisations and the number of recipient countries and DFA size fluctuates from year to year. Considering the lack of capital of postharvest management, DFA in Table 5 is unlikely to be sufficient to improve the circumstances. Funding from international organisations is also limited; hence, the provision of substantial DFA to many developing countries is difficult. To improve this support limitation, developing countries should apply strategies for the effective use of capital provided by agricultural development support.

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7. Conclusions

Global population growth and environmental burdens have caused rising concerns regarding future food security worldwide. Despite these growing concerns, many crops are discarded without being consumed at postharvest stages. In particular, the postharvest loss is experienced in many developing countries mainly due to a lack of capital and technology for food storage, processing (i.e. threshing, drying and packaging) and distribution. Investigating the existing literature and FAOSTAT data, this study demonstrated that a significant amount of postharvest loss is realised in the least developed countries. Moreover, a theoretical analysis demonstrated that a lack of knowledge and skills among local labourers can result in the lack of full utilisation of improved capabilities for handling postharvest crops, and the postharvest loss is not reduced as expected. Theoretical analyses demonstrated that funding bodies are discouraged from providing support to developing countries in circumstances wherein the outcome of the support due to failing use of capital is uncertain. The proportion of AIR in the least developed countries is significantly lower than that in the G20 countries, which is consistent with the theory of this study indicating the lack of capital for postharvest management in developing countries. DFA to the least developed countries from the international organisations also appeared to be insufficient for improving the current circumstances. Funding bodies also have limited funds, and it can be extremely difficult to provide adequate support. Efforts to maximise the limited capital in developing countries are critical to meaningful improvement.

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Acknowledgments

We are deeply grateful for the editor of Postharvest Technology - Recent Advances, New Perspectives and Applications. We are also grateful to IntechOpen and Meikai University, which supported our research in various ways.

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Notes

  • Since there are many types of food, typical crops (i.e. maize, wheat and rice) are used in this study. The least developed countries in Table 1 are identified by the data source. Countries not reporting data for any at least one of the three crops are omitted. The European Union (EU) is omitted in Table 2 because the EU does not represent a single nation. The variables are identified in FAOSTAT for Product with the Domain code FSB, Element code of 5511 and Item codes for maize–2514, rice–2807 and wheat–2511. Loss is represented by Domain code FBS, Element code 5123 and Item codes for maize–2514, rice–2807 and wheat–2511. The codes (other than area codes) of variables in Table 2 are identical to those in Table 1. The area and year codes of the variables are not presented because they depend on the countries and years selected. For more information about these codes, please refer the data source.
  • According to FAOSTAT, production is reported at the farm level for crop and livestock products, whereas loss represents wastage during the year at all stages at which production is recorded and the household. As a result, in the case of some countries, loss exceeds production.
  • Some types of postharvest crops such as grains are threshed prior to being cleaned.
  • Eq. (1) takes form of Cobb–Douglas production function, which is often used by economists to express output as a function of labour and capital.
  • We assume that the number of crops harvested is fixed.
  • In this setup, Eqs (1)–(3) are assumed at t=2.
  • Financial analysis generally considers that a future monetary value is lower than the corresponding current monetary value (i.e. 1 dollar at t=2 is valued lower than 1 dollar at t=1). This is because money at a current time can be invested, and an investment return can be realised at a future time.
  • The funding body can be considered indifferent regarding the choice to provide or not provide the development support when ROI=0.
  • USAID is established in 1961 to lead the US government’s international development and humanitarian efforts [16].
  • SAA is the NGO established in 1986 aiming to support the development of farming productivity and the rural economic value chain [18].
  • Because the situation in Myanmar has changed drastically in recent years, we decided not to refer the agricultural development in Myanmar.
  • The area and year codes of the variables are not shown because these depend on the countries and years selected. For information on these associated codes, please refer the data source.
  • Since realisation of outcome from a capital investment takes time, Table 3 presents the AIR for both 2018 and 2019.
  • The EU is omitted in Table 4 for the same reason as in Table 3. Moreover, due to the data availability, data for China (mainland) is presented, rather than the whole of China.
  • As this chapter does not afford enough space, detailed information on recipient countries is omitted in Table 5. The DFA variable can be identified in FAOSTAT with Domain code EA, Element code 6110, Item code 22041 and Purpose code 310. DFA value is rounded to the first decimal place. The Donor code, Recipient code and Year code of the variables are not presented because these depend on the donors, recipients and years selected. For the information on these codes, please refer to the data source.

Written By

Ryusuke Oishi

Submitted: September 22nd, 2021 Reviewed: October 14th, 2021 Published: February 7th, 2022