Climate-responsive innovation in agro-processing SMEs

Abstract

This study explored whether and how small and medium enterprises (SMEs) in the South African agro-processing industry are innovating in response to climate change, as well as how they could be empowered to innovate even more. This is an important topic because although the business community and academia have good understanding of how climate change affects agriculture, less is known about its effects higher up in the food value chain, or how to address them. The research findings indicate that agro-processing SMEs are already experiencing increased difficulty in sourcing inputs, due to climatic changes. On the positive side, some parts of South Africa are experiencing an increase in rainfall and thus greater availability of some of the inputs needed by agro-processing SMEs. Nonetheless, industry bodies in the agro-processing sector have a very important role of conducting and disseminating research to guide their members on the climatic changes they should expect, and how to innovate in order to remain viable. Governmental agencies that support SME development also ought to incorporate climate change preparedness into the advisory services they provide to agro-processing SMEs. The key finding of this qualitative study was that under the changing climate, agro-processing SMEs can only survive and growth through increased innovation. Innovation is fostered by an enabling ecosystem. For agro-processing entrepreneurs to remain viable under the changing climate, they ought to partner with larger corporates in their sector, the research community, industry bodies, financial services providers and government, to access the knowledge, resources and networks needed to foster innovation. These organisations could come together to formalise an innovation ecosystem, to the benefit of all participants and society at large. It is recommended that society ought to prepare for escalating food prices as food manufacturers experience more difficulty sourcing inputs of the quantity and quality needed. Furthermore, there is a risk that some entrepreneurs might abandon their agro-processing businesses in favour of less climate-sensitive endeavours, leading to food shortages. Society also ought to prepare to make dietary changes as the climate becomes less favourable for the current preferred foods. These are important considerations for food security and the broader economy.