Investment in Agriculture IFADC International Food Aid and Development Conference 27– 29 June 2011 Kansas City, USA
Dec 22, 2015
Investment in Agriculture
IFADC International Food Aid and Development Conference 27– 29 June 2011Kansas City, USA
Outline
• Why is investing in agriculture important?
• What has happened in investment in agriculture?
• What are the needs?
• Conclusion
Investment in agriculture is clearly associated with hunger reduction
GDP growth originating in agriculture benefits
the poorest half of the population substantially more
Source: Ligon and Sadoulet 2007. Estimating the effects of aggregate agricultural growth on the distribution of expenditures. The World Bank, 2007
Investment in agriculture is clearly associated with hunger reduction
Source: von Cramon-Taubadel et al. 2009
Share of Total Government Spending in Agriculture 1980 - 2002
Source: Public Spending in Developing Countries: Trends, Determination, and Impact – Shenggen Fan and Anuja Saurkar
Domestic public investment in agriculture has been neglected
Official Development Assistance, 1980 - 2009
Foreign public investment in agriculture has been neglected
Investment in agricultural capital, 1976-2007
Source: von Cramon-Taubadel et al. 2009
130142 (2009$)
Average annual rates of ACS growth before and after 1990
Investment in agricultural capital, 1975-2007
Food demand to 2050
• Food demand to increase by 70 %– Population growth– Income growth– Dietary changes
• The natural resource base is adequate to meet the demand– Natural degradation stopped or significantly slowed – Climate change addressed– Small increase in cultivated area– 90 % from increased yields and cropping intensity
Investing in agriculture to meet 2050 demand
142
209
35947
70
120
0
100
200
300
400
500
600
Current investment inagriculture
Meeting demand in2050
Halving hunger by2015 and eliminating
hunger by 2025
US
$ bi
llions
per
yea
r (g
ross
)
Public
Private
• $189 billion in 2007, $278 billion for 2050
• assumed public = 1/3 private
• about 50% higher to meet demand in 2050
• $142 billion private in 2007
Source: FAO (preliminary estimates)
Investing in agriculture to reduce hunger
142
209
35947
70
120
0
100
200
300
400
500
600
Current investment inagriculture
Meeting demand in2050
Halving hunger by2015 and eliminating
hunger by 2025
US
$ bi
llions
per
yea
r (g
ross
)
Public
Private
• + $50 billion public
• assumed that private investment would increase in proportion
Source: FAO (preliminary estimates)
139
204
352
3
4
8
39
58
100
8
12
20
0
100
200
300
400
500
600
Current investment inagriculture
Meeting demand in2050
Halving hunger by2015 and eliminating
hunger by 2025
US
$ bi
llions
per
yea
r (g
ross
)ODA
Developing government
FDI
Developing private
Most investment is funded by domestic private sources in developing countries
Source: FAO (preliminary estimates)
• $8 billion ODA to agriculture in 2007
• $3 billlion FDI in developing country agriculture in 2007
• assumed to grow proportionately
Conclusions• Investment in agriculture should be
strengthened if we want to reduce hunger and poverty around the world
• Will current political commitment be sustained and translate into actual financing?– Positive signs and less positive signs
• Questions for future work– Investment in what areas? For what? From where?