[{"bbox": [85, 154, 355, 186], "category": "Section-header", "text": "## 2.2 Problem Analysis"}, {"bbox": [108, 201, 1133, 256], "category": "Text", "text": "Several challenges currently undermine the contribution of the agriculture sector, and agriculture value-chains to Mozambique's sustainable development:"}, {"bbox": [108, 268, 1133, 323], "category": "Section-header", "text": "### A vicious circle of inefficient vulnerable production systems leading to ecosystems degradation and biodiversity loss"}, {"bbox": [108, 337, 1133, 656], "category": "Text", "text": "Mozambican agriculture is almost totally dominated by small-scale, subsistence farming, which perpetuates a cycle of vulnerability and resource degradation. Generalised practices, such as slash-and-burn, prevalent in nutrient-poor miombo woodlands, imply continuous land clearance to maintain productivity. Limited access to production assets, agricultural finance, new technologies and markets, as well as to research and extension services, hinder smallholders' ability to improve productivity and incomes. Although agro-ecological intensification holds promise, its adoption remains mired by the trade-offs between short-term income gains and long-term sustainability objectives. Yet conventional commercial agriculture, practiced by a few large companies, remains the major threat in localized areas, which based on highly intensified monoculture (maize, soy, fruits, and forests concessions), have a higher impact on soil degradation and habitat loss. Moreover, climate change adds another layer of complexity, heightening livelihoods vulnerability and degradation risks. Thus exasperating food insecurity as highlighted in IPC analysis, and alimenting the cycle by forcing populations to adopt more negative coping mechanisms which severely and incrementally impact on ecosystems and social cohesion."}, {"bbox": [108, 668, 1038, 696], "category": "Section-header", "text": "### Insufficient value-chain integration among actors and within productive sustainable landscapes"}, {"bbox": [108, 706, 1133, 1025], "category": "Text", "text": "The Mozambique agriculture sector is characterised by a disconnected structure, where a large number of smallholder farmers mainly produce for subsistence, with few market-orientated operators. Most value-chains also lack integration around anchor companies, with few intermediary actors retaining most of the profit, reducing efficiency and competitiveness. Moreover, inadequate infrastructure (e.g. obsolete equipment, inefficient energy sources, decrepit road network) are burdening operators with high costs and small margins limiting investments in aggregation and value addition or longer term production objectives. These fragmented and low-value commodity chains are more likely to have negative environmental impacts, while also proving ineffective in driving livelihoods improvements and private sector engagement. In addition, value chain development initiatives often operate in silos and prioritise short term production gains without considering implications across the entire landscape, such as impacts on ecosystems and conservation areas. These approaches increase the risk of habitat fragmentation, deforestation and loss of biodiversity, and miss the opportunities for synergies between agriculture development and conservation efforts."}, {"bbox": [108, 1037, 1022, 1065], "category": "Section-header", "text": "### Very few, underperforming SMEs, and unable to support the green transition and create jobs"}, {"bbox": [108, 1078, 1133, 1372], "category": "Text", "text": "Mozambique's agribusiness sector needs to stimulate \"the missing middle\", i.e. rural based SMEs capable to promote value-chains both upstream and downstream, by adding local value, creating jobs and growing sustainable business relationships with small and medium scale farmers. These companies have an opportunity to maximize value-chains' nature-positive effect within specific landscapes, balancing (and integrating) sustainability and market value. However, the lack of incentives for business development and limited access to finance and technical assistance for enterprises are factors preventing their professionalization and increased competitiveness, hampering growth and employment creation. This is more relevant regarding inclusiveness and opportunities for youth and women entrepreneurs, and to diversify activity for no-farm and off-farm business. Technical training institutions are scarce, under-funded and ill-equipped to offer relevant skills. The incubation and acceleration of rural entrepreneurs is still at its infancy with only a few \"pre-incubation\" services, with support of projects and funded initiatives."}, {"bbox": [108, 1384, 906, 1408], "category": "Section-header", "text": "### An unfavourable business environment for sustainable investment and innovation"}, {"bbox": [108, 1423, 1133, 1637], "category": "Text", "text": "The local financial sector offers very few accessible products for firms interested to invest upstream on contract farming / out-growers schemes and downstream into agro-processing and industrial transformation. This hinders diversification, value-addition and the opportunities for greener value-chains, economies of scale and growth. Most donors' grants and loans address only capital expenditure requirements but there is a lack of supply of affordable working capital for all segments of the value-chains. Commercial banks tend to offer unsustainable levels of interest rates and collaterals to agricultural enterprises. An overall unfavourable business climate, with predominance of informal transactions, inhibits private sector investments in sustainable technologies, due to long returns on investments. In addition, there is very little research and development responding to private sector"}, {"bbox": [1037, 1681, 1143, 1706], "category": "Page-footer", "text": "Page 7 of 26"}]