Multinationals and Modernisation of Domestic Value Chains in Africa: Case Studies from Ethiopia

Abstract

Multinationals can facilitate modernisation in food value chains in developing countries. While most studies focus on export chains, insight on domestic food chains is scant. Our study aims to provide detailed insights into the process of upgrading domestic value chains. A rapidly growing beer market has attracted foreign brewery companies to invest in Ethiopia. These foreign brewers have introduced new sourcing structures in order to increase the supply of high quality raw material. We have used a case study design to explore upgrading processes in malt barley chains, where malt barley is both a food and a cash crop. By introducing strong vertical coordination between farmers and buyers, facilitated by producer organisations and NGOs, foreign brewers have been able to upgrade malt barley chains. We found that both farmers and brewers have benefitted from this upgrading process.