The agriculture sector in Mozambique
Overview of Mozambique's Agricultural Sector in 2025: Opportunities for Investment in Agriculture and Agro-Processing
As an investor eyeing Mozambique's agriculture and agro-processing sectors, you'll find a landscape rich in potential but marked by structural challenges. With 36 million hectares of arable land—much of it underutilized—the country offers scale for commercial operations, particularly in value-added processing to capture export premiums. However, rain-fed farming, climate risks, and infrastructure gaps demand resilient strategies. This overview, tailored to your interests, structures insights around the eight specified aspects, drawing on 2025 data. Agro-processing emerges as a high-return entry point, leveraging local raw materials like cashews and sugarcane for global markets.
1. Main Components of the Agricultural Sector
Mozambique's agricultural sector encompasses four primary sub-sectors, dominated by smallholder production but with growing commercial pockets suited for agro-processing investments.
- Crops: The largest sub-sector, covering ~5.1 million hectares cultivated by 97% of farmers operating on less than 10 hectares. Key staples include cassava (2.5 million tons annually), maize (2.2 million tons), and rice; cash crops like sugarcane (1.2 million tons), cashew nuts (120,000 tons), and sesame drive exports. Opportunities abound in processing these into sugars, oils, and nuts for value addition.
- Livestock: Subsistence-oriented, with ~2.5 million cattle, 1.5 million goats, and poultry flocks. Beef and dairy processing lag, but integrated agro-processing models (e.g., feedlots) could tap urban demand.
- Fisheries: Coastal and inland resources yield ~500,000 tons yearly, including prawns and tilapia. Aquaculture is nascent but promising for processed seafood exports, with EU standards compliance key.
- Forestry: Manages 44 million hectares, exporting timber (~300,000 cubic meters) and non-timber products. Sustainable agro-forestry hybrids offer processing avenues like essential oils.
These components form a subsistence base transitioning toward commercialization, ideal for investors scaling smallholder linkages via outgrower schemes.
2. Economic Significance of the Sector
Agriculture remains Mozambique's economic anchor, though its productivity lags behind regional averages, highlighting the urgent need for investment in mechanization and processing. In 2024, the sector contributed around 26.3% to GDP, with projections for 2025 suggesting a stable share of 25–27%, even as services expand. Agriculture is also the backbone of employment, providing jobs for about 70% of the workforce—equivalent to nearly 10 million people—a trend expected to continue, especially as the country's youth population drives rising labor demand.
On the trade side, agriculture generated roughly US$1.2 billion in export revenue in 2024, representing 15% of Mozambique's total exports. Projections for 2025 indicate a rise to US$1.3–1.5 billion, led by traditional cash crops such as cashews and sugar. Despite a slight dip in GDP share in 2024 due to weather shocks, the sector continues to play a central role in rural poverty reduction. Agro-exports like cashews alone account for about 10% of foreign exchange earnings. For investors, agriculture offers strong potential for job creation—recent projects have generated around 17,000 new positions—as well as multiplier effects in processing hubs such as Beira.
3. Market Structure and Trade Dynamics
The market is fragmented, with smallholders selling via informal channels, but trade imbalances highlight import substitution opportunities in agro-processing.
- Import/Export Balance: Exports reached US$8.28 billion in 2023 (agri ~15%), but food imports (e.g., wheat, rice) hit US$1 billion annually, driven by low self-sufficiency. 2025 policies aim to cut imports by 20% via local processing.
- Major Trading Partners: Exports target India (cashews, 25%), China (sugar, 20%), South Africa (15%), UAE, and Thailand. Imports from South Africa (machinery), India (fertilizers), and Portugal (equipment). EU is a key agri-food partner (US$200 million in 2024).
- Value Chain Integration: Local chains are short (farm-to-market), but global ties via SADC and AfCFTA enable cashew processing for EU markets. Investors can integrate via contract farming, reducing 30% post-harvest losses and capturing 20-30% margins in exports.
This dynamic favors agro-processors bridging domestic surpluses (e.g., sugarcane) to high-value global chains.
4. Policy and Regulatory Environment
Mozambique's framework supports investment through incentives, but implementation gaps persist.
- Government Subsidies: The 2019-2022 support averaged 0.5% of ag GDP (US$50 million/year), focusing on seeds/fertilizers via the National Agriculture Input Program. 2025 budget boosts to US$100 million for climate-resilient crops, with agro-processing eligible for 10-year tax holidays under Law 8/2023.
- Land Tenure Systems and Reforms: Customary rights dominate; investors secure 50-year DUATs (renewable) via community consultations. Reforms since 2015 emphasize titling for 1 million smallholders, reducing disputes by 15%. For agro-processing, secure DUATs in Zambezia enable large-scale outgrowers.
- Food Safety and Quality Control Standards: The National Food Safety Agency enforces Codex-aligned standards, with EU-equivalent certification for exports (e.g., cashews). Effectiveness is moderate (80% compliance in audited firms), but gaps in testing labs offer PPP opportunities for investors.
These policies create a welcoming entry, with APIEX facilitating DUATs in 60 days.
5. Infrastructure Supporting the Sector
Infrastructure remains a key bottleneck for Mozambique's agricultural sector. Rural gaps continue to constrain scalability, yet recent investments along strategic corridors suggest growing viability for agro-processing.
Irrigation is one of the most pressing limitations: only 4% of the country's arable land—about 150,000 hectares—is currently irrigated, concentrated mainly in the Limpopo Valley. Ongoing World Bank and IFAD projects aim to add 20,000 hectares by 2026, particularly for high-value crops. Transport and logistics face similar challenges. The Beira Corridor alone handles around 70% of agricultural trade through its road and rail links to Zimbabwe, but less than 30% of rural roads are in adequate condition. Cold chain coverage is still at an early stage, reaching only about 10% of perishable produce; this gap contributes to post-harvest losses of roughly 25%.
Storage capacity shows mixed results: silos and warehouses operate at about 50% utilization, yet post-harvest losses remain high at around 30%. New private investments, such as a US$50 million IFC-funded silo complex in Nampula, are beginning to improve storage for export crops like cashews. Processing capacity is similarly underused. Facilities are concentrated in Maputo and Beira, including 10 cashew plants that together handle 80% of exports, but overall utilization stands at just 60%. This signals ample space for foreign direct investment in diversified units such as juice and oil processing.
Looking ahead, 2025 priorities include expanding irrigation through multilateral projects, upgrading Beira's road and rail infrastructure (with about US$500 million earmarked), expanding private storage and cold-chain facilities, and developing agro-parks in Sofala to raise processing efficiency. For investors, the cold chain stands out as a high-impact area: public-private partnerships could reduce losses significantly while offering attractive returns in the range of 15–20%.
6. Level of Sustainability and Climate Vulnerability
Mozambique's agricultural sustainability efforts are gradually gaining momentum, yet the sector remains highly vulnerable to climate shocks—opening opportunities for green technology and climate-smart investment. Extreme weather is already a defining constraint: annual cyclones and droughts affect around 20% of farmland, while the 2024 floods alone reduced national yields by 15%. Projections indicate that, without adaptation, agricultural production could decline by 10–20% by 2030.
Water resource management poses additional challenges. With 95% of agriculture still rain-fed, farmers remain highly exposed to rainfall variability. Basin management initiatives, such as those under the Limpopo Commission, are making some progress, but over-extraction continues to threaten soil salinization. Soil degradation is another critical factor, with 40% of farmland affected by nutrient loss and erosion due to monocropping. Conservation agriculture practices—such as crop rotation and cover cropping—currently cover only about 10% of farms, underscoring the scope for expansion.
The uptake of modern technologies remains limited but promising. Mechanization rates stand at just 5% when measured in tractors per hectare, and precision agriculture tools, including drones, are being piloted on only about 5% of commercial farms. Climate-smart agriculture is expanding more rapidly: adoption of drought-resistant seed varieties has reached 15%, supported by IFAD's US$100 million program. For the agro-processing segment, sustainable sourcing practices are creating new market niches. Certified cashews, for example, can command price premiums of up to 10%, while the introduction of solar dryers and similar technologies is helping producers mitigate post-harvest risks.
7. Food Security Indicators
Chronic food insecurity continues to constrain Mozambique's growth prospects, though the production of staple crops provides a potential pathway to greater self-sufficiency, particularly if linked to processing initiatives. At present, the country achieves around 70% self-sufficiency in maize and cassava, while rice and wheat deficits—roughly 30%—are covered through imports.
Nutritional outcomes underscore the severity of the challenge. Around 38% of children under five suffer from stunting, and between October 2024 and March 2025, an estimated five million people are projected to face food insecurity at IPC Phase 3 or above, driven by a combination of conflict and climate shocks.
The structure of farming further complicates food security strategies. Roughly 97% of agricultural production comes from smallholders, with an average landholding of less than two hectares, while only 3% of farms are commercial operations. This dual structure limits economies of scale, though outgrower schemes are beginning to make an impact, with about 20% of small farms now integrated into commercial value chains.
For investors, this environment offers scope to align commercial opportunities with social impact. Expanding fortified processing—such as producing nutrient-enriched flours—can both reduce malnutrition and generate viable returns. Such initiatives would complement the World Food Programme's 2025 targets, which aim to reach 900,000 beneficiaries with fortified food products.
