The State of

Food andAgriculture

2010-11

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

2012

The State of Food and Agriculture

Investing in agriculture for a better future

Keith Wiebe and Sarah Lowder

Food and Agriculture Organization of the United Nations

International Food Policy Research Institute

Washington DC, 22 January 2013

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

Higher prices have renewed attention to agriculture

Source: FAO

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

ODA to agriculture has followed price trends

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

Agriculture has also declined as a share of domestic public expenditures

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

(WIR 2009)

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

FDI is increasing, but …

Total FDI in 27 countries averaged $922 billion per year in 2007-08• 6 percent to food and agriculture• 5.6 percent to food, beverages and tobacco, mostly to high-

income countries• Only 0.4 percent to agriculture

FDI in agriculture in 44 countries averaged $5.4 billion per year in 2007-08• More than double the level in 2005-06• 78 percent was to upper-middle-income and high-income

countries

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

On-farm investment has followed a similar pattern

Source: Authors’ calculations using FAO 2012a

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

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The composition of on-farm capital varies

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

Farmers are the largest investors in agriculture

Source: Lowder, Carisma and Skoet, 2012.

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

Investing in agriculture raises productivity

Source: FAO, 2012a.

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

Investing in agriculture reduces hunger

Source: Authors’ calculations using FAO, 2012a and FAO, IFAD and WFP, 2012.

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

Progress in reducing hunger has slowed

Source: FAO (SOFI 2012)

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

Investments are too low in regions that need them most

Source: Authors’ calculations using FAO, 2012a and World Bank, 2012.

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

North Africa0%

Sub-Saha-ran

Africa17%

Western Asia1%

South Asia33%

Caucasus and Central Asia1%

East Asia27%

South-East Asia14%

Latin America6%

Caribbean1%

Oceania0%

1990–92: 980 million

North Africa1%

Sub-Saharan Africa27%

Western Asia2%South Asia

36%Caucasus and Cen-tral Asia

1%

East Asia20%

South-East Asia

8%

Latin America5%

Caribbean1%

Oceania0%

2010–12: 852 million

Hunger by region, 1990–2012

Source: FAO (SOFI 2012)

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

The investment climate is critical

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

Improved governance is a key element

Voluntary Guidelines on the Responsible Governance of Tenure• Endorsed by the CFS in May 2012

Principles for Responsible Agricultural Investment• Land and resource rights• Food security• Transparency and good governance• Consultation and participation• Economic viability• Social sustainability• Environmental sustainability

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

Good business environments are associated with more investment

Source: Authors’ calculations using FAO, 2012a and World Bank, 2011b.

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

Policies are also important

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

Monitoring policy impacts: rice in Mali

Source: MAFAP

Large share of ag budget

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

2005 2006 2007 2008 2009 2010

Nom

inal

Rat

e of

Pro

tecti

on

… but policies provide price disincentives to producers

Source: MAFAP

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

Governments must focus onpublic goods with large impacts

Source: Fan, Zhang and Zhang, 2004.

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

Key messages

Investing in agriculture is one of the most effective strategies for reducing poverty and hunger

Farmers are the largest investors in agriculture, and must be central to agricultural investment strategies

A favourable investment climate is necessary but not sufficient small farmers need special assistance to overcome barriers large-scale investments need special attention to ensure broad and

sustainable benefits

Governments must focus on public goods with high social returns

An improved evidence base is essential

Food and Agriculture Organization of the United Nations

Economic and Social Development Department

#sofa2012

For more information

The State of Food and Agriculture

Investing in agriculturefor a better future

FAO‘s flagship publication.

Available in English, French, Spanish, Russian, Arabic and Chinese

www.fao.org/publications/sofa