World will need billions for agriculture

09 October 2009

To have enough food to feed the world population, projected to be over nine billion by 2050, a net investment of $83 billion a year in agriculture will be needed in developing countries. This estimate has been provided by FAO.

Rome: Agricultural investment thus needs to increase by about 50%, according to the paper prepared for the High Level Experts’ Forum on How to Feed the World in 2050, Rome 12-13 October 2009.

Some 300 top international specialists will attend the meeting.

Required investments include crops and livestock production as well as downstream support services such as cold chains, storage facilities, market facilities and first-stage processing.

Private investment essential

The projected investment needs to 2050 include some $20 billion going to crops production and $13 billion going to livestock production, the paper said. Mechanisation would account for the single biggest investment area followed by expansion and improvement of irrigation.

A further $50 billion would be needed for downstream services to help achieve a global 70% expansion in agricultural production by 2050.

Most of this investment, in both primary agriculture and downstream services, will come from private investors, including farmers purchasing implements and machinery and businesses investing in processing facilities.

Public investment also necessary

In addition, public funds will also be needed to achieve a better functioning of the agricultural system and food security, the paper said. Priority areas for such public investments include: i) agricultural research and development; ii) large-scale infrastructure such as roads, ports and power, and agricultural institutions and extension services; and iii) education, particularly of women, sanitation, clean water supply and healthcare.

But in 2000 total global public spending on agricultural research and development totalled only some $23 billion and has been highly uneven. Official Development Assistance (ODA) to agriculture decreased by some 58% in real terms between 1980 and 2005, dropping from a 17% share of aid to 3.8% over the period. Presently it stands at around 5%.

Of the projected new net investments in agriculture, as much as $29 billion would need to be spent in the two countries with the largest populations – India and China. As far as regions are concerned, sub-Saharan Africa would need about $11 billion invested, Latin America and the Caribbean $20 billion, the Near East and North Africa $10 billion, South Asia $20 billion and East Asia $24 billion.

Regional differences

The projections point to wide regional differences in the impact of new investments when translated into per capita terms. Given different population growth rates, Latin America, for instance, is expected to almost halve its agricultural labour force while sub-Saharan Africa will double its own.

This means that by 2050 an agricultural worker in Latin America would have 28 times the capital stock – or physical assets such as equipment, land and livestock – available as his or her colleague in sub-Saharan Africa.

Foreign direct investment in agriculture in developing countries could make a significant contribution to bridging the investment gap, the paper said.

But political and economic concerns have been raised about so-called “land grab” investments in poor, food-insecure countries. Such deals should be designed in such a way as to maximise benefits to host populations, effectively increasing their food security and reducing poverty.

Source : FAO