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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?
Thank you
