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Abstract
Research throughout the developing world has shown a potentially strong relationship
between agro-industrial investments and growth in smallholder agriculture and poverty reduction.
This paper suggests that agro-industrial investments, if properly structured to relate to smallholder producers,
can play a very important role in rural poverty reduction strategies in Mozambique. Current
agro-industrial investments in the country demonstrate various degrees of connectedness with
rural households. The choice of how, and how closely, to relate to smallholders is determined
by the characteristics of the commodity, by the physical, political, and economic environment in
which the investment takes place, and by the knowledge, skills, experience, and preferences of
the smallholders and of the investors and company management. Given the breadth of factors
involved, different approaches can emerge under apparently very similar circumstances, each
with differing implications for rural poverty reduction. Therefore, knowledge of the likely
effects of alternative investment options in the food and fiber industries on rural incomes and
firm profits becomes an important asset in the design of rural poverty reduction strategies.