New FAO Report Calls for Increased Investment in Sustainable Agriculture

Global discussion surrounding agricultural investment and funding has increased in recent years, with farmers, development advocates, and policymakers alike calling for wider investments to fight hunger and poverty. The 2012 edition of the FAO's State of Food and Agriculture Report follows closely on this discussion, focusing on the importance of farmers as investors and the need for a stronger global enabling environment.

Investing in Agriculture for a Better Future finds that farmers themselves are the largest investors in developing country agriculture. In fact, in low- and middle-income countries, farmers invest more than four times as much capital in agricultural annually as their governments. However, the regions where hunger and poverty are most prevalent – South Asia and sub-Saharan Africa – have been experiencing stagnant or declining rates of agricultural investment per worker for the past thirty years. To fight this trend and ensure that global agricultural production is enough to feed 9 billion by 2050, both farmers and governments will need to increase the level and quality of agricultural investment.

Since farmers make up such an important segment of agricultural investors, governments and development partners must make them central to any investment strategy. To spur further farmer investment, the report says, governments should focus on creating a conducive environment that provides market incentives to encourage farmers to invest. The elements of a good enabling environment include stable governance, transparent trade policies, effective and accessible market institutions, access to credit, and clear property rights. Governments should focus especially on creating such an environment for smallholders, who make up a large portion of the world's farmers but face extreme constraints. The report calls for a leveling of the playing field between smallholders and larger firms.

The report also calls for increased investment in public goods such as education and infrastructure to spur agricultural growth. Such public goods are an indispensable part of a good enabling environment, yielding strong returns in both productivity and poverty reduction.