Agricultural investment most vital
for economic growth
investment is one of the most important and effective
strategies for economic growth and poverty reduction in
rural areas of the world where the majority of the poor
According to Food and
Agriculture Organisation (FAO) of the United States, gross
domestic product (GDP) growth in agriculture has been shown
to be at least twice as effective in reducing poverty as
growth originating in other sectors (World Bank, World
Development Report 2008).
The regions of the world
where hunger and poverty are most widespread today have seen
stagnant or declining rates of agricultural investment in
agriculture over the past three decades.
Eradicating hunger in these
regions and increasing food production requires substantial
increases in the level of investment in agriculture
including dramatic improvements in the level and quality of
governments own investment in the sector.
The FAO estimates that an additional investment of USD 83
billion will be needed annually to close the gap between
what low and middle income countries have invested each year
over the last decade and what is needed by 2050.
In other words, yearly
investment in agriculture needs to rise by more than 50 per
The FAOs activities to
encourage investment in agriculture and rural development
include: technical and economic advice to governments on
policies and legislation that influence public and private
Capacity development of governments to design and execute
multi-sector and multi-partner investment strategies aligned
with their own priorities assistance for countries to
design, implement and evaluate investments, not only for
agriculture and rural development, but also to meet the food
and nutrition needs of their citizens; technical support to
partner international financing institutions to leverage
Support to the development and implementation of the
countries agricultural, food security and nutrition
investment strategies and plans under the Comprehensive
Africa Agriculture Development Programme (CAADP) of the New
Partnership for Africas Development (NEPAD);
Analysis of trends and impacts of foreign agricultural
investment in developing countries; and Support to
international consultations to develop principles for
responsible agricultural investment.
The Inter-Agency Working
Group (IAWG) composed of FAO, UNCTAD, IFAD and the World
Bank have jointly developed the Principles for Responsible
Agricultural Investment that Respect Rights, Livelihoods and
These draw attention to rights and livelihoods of rural
populations and the need of socially and environmentally
sustainable agricultural investments.
The level of investment in
agriculture is positively correlated with food security and
poverty reduction. Regrettably, agricultural investment in
developing countries decreased sharply over the last
Substantial increases are needed to eradicate hunger and
poverty, create decent jobs and livelihood opportunities and
ensure environmental sustainability.
As the largest on-farm investors, farmers must be central to
agricultural investment strategies. Their investments must
be stimulated and complemented by governmental and donor
investments in public goods.
Investments by companies along the entire value chain also
play an important role.
However, the benefits of
agricultural investments will not arise automatically and
some forms carry risks for local communities and the
The FAO promotes responsible investment in agriculture
through empirical research and by supporting various
Investing in agriculture is essential for reducing hunger
and promoting sustainable agricultural production.
Those parts of the world
where agricultural capital per worker and public investments
in agriculture have stagnated are the epicenters of poverty
and hunger today.