Looking Ahead

A three-year commitment to spend $22 billion on driving agricultural growth and combating food insecurity is a laudable goal, yet the barriers to food security and poverty reduction remain higher than ever. Food prices are rising again, driving millions of people back into poverty. Climate change threatens to stifle agricultural productivity, if not send it into reverse, and rivers and basins are drying up, leaving rain-fed farmers in even greater peril. Investments to tackle these issues often overlook those who need the most support or those who would stand to benefit the most. Based on weak progress against the L’Aquila promises, donor apathy appears to be growing again. The L’Aquila promises are just the foothills of an uphill climb, but one that donors cannot afford to retreat from.

The Growing Role of the G20
Under the weight of these daunting global challenges, a new era of global politics is emerging through the growing power of the G20. [1] Within the G20, the Development Working Group offers a forum to discuss development issues and to determine how the G20 can support development in low-income countries and address issues such as food insecurity. As part of the G20 Development Working Group, France has elevated food security on the G20 agenda and strongly champions curbing commodity price volatility to reduce global food insecurity. Rampant speculation in commodity markets is a driver of price volatility and price increases. Better transparency and limits on the volume of food commodity futures that can be traded will help to minimise major price swings. This alone, however, will not produce the transformative effects that can be achieved through investing in agriculture.

Speculation on financial markets is not the only driver of high and volatile prices. Challenges such as climate change, Northern country biofuel policies, growing populations and dramatic weather events all contribute. This suggests that building the resilience of vulnerable populations to shocks – no matter what their origin – will be most effective in staving off global food insecurity. The influence of the emerging economies in the G20, which have recent expertise in development through agricultural-led growth, and which are becoming donors themselves, have significant value to add in improving development assistance to agriculture, generating appropriate private sector investment and building knowledge capacity.

Beyond L’Aquila
Foreign assistance from the G8 and other L’Aquila donors is not the only source of investment in agriculture. In fact, it is only one of many components to achieving food security, reducing poverty and growing economies. Investments are generated from the private sector, national governments and innovative sources of finance. The challenge is to ensure that, first, public investments leverage and encourage additional and continued support from other sources of finance and, second, that these investments are aligned with ‘smart aid’ and human rights principles.

The Private Sector
More and better investments in agriculture are sorely needed, but not all investments are equal. Donor and taxpayer fatigue has generated a new mantra of calling for public-private partnerships and private sector investments to achieve development. However, emerging private sector responses to these calls often materialise in the form of land investments, without necessarily investing in the people using these lands. Trends of ‘land grabs’, where communities are kicked off their land or are required to farm in schemes that leave them worse off than before, must be prevented. Investors are also capitalising on new waves of projected scarcity based on forecasts that the global population is set to reach 9 billion by 2050 and that agricultural productivity must increase by 70% to feed the world. To achieve this goal, investors favour large-scale agricultural development at the expense of, rather than as a complement to, small-scale farming. Although small-scale farming is often more productive than large-scale cultivation, intense pressures from investors will continue to push back progress against extreme poverty if the nature of investments is not conducive to supporting small-scale farmers.

Innovative Finance
Aid for agriculture and food security will fall short of the resources needed to eradicate hunger and poverty; therefore, it is critical that the G8 and G20 leverage innovative financing mechanisms in the coming years. Relative to other sectors, agriculture presents greater barriers to private sector investment because diverse landscapes, poor infrastructure and weak markets suggest that returns will be low. Global research and development spending on agriculture totalled $25 billion in 2000, but more than 40% of this was privately funded and 96% of the research was conducted in developed countries. This trend should be reversed by the G8 and G20 by ‘pulling’ the private sector into investing in R&D in poor countries for poor country crops and challenges. The private sector is largely absent, but it could make significant strides in areas such as improving the distribution and adoption of existing technologies. Some examples include conservation practices, appropriate fertiliser use, small-scale irrigation, post-harvest handling and storage practices and value-added food processing in remote and under-served areas. The G8 and G20, however, need to incentivise their investment, first by fulfilling their commitments and, second, by creating the right policy environment and adequate infrastructure to minimise risk and stimulate growth.

National government investments
The Comprehensive African Agriculture Development Programme (CAADP) is an African-led initiative that seeks to improve food security and increase agricultural productivity growth. Through a process of inclusive multi-stakeholder consultations under the initiative, African countries develop strategic plans or compacts that, once agreed, can be transformed into investment plans to be co-financed by African governments and donors. In 2003, at a summit in Maputo, Mozambique, African Union heads of state committed to spend 10% of their national budgets on agriculture to reach agricultural growth of 6% annually. Known as the ‘Maputo Commitments’, these promises are a framework for ensuring that African governments play their part and adequately invest in agriculture and rural economic growth. To date, however, progress against the commitments has been mixed.

As of June 2011, 25 countries had signed CAADP compacts but only seven – Burkina Faso, Ethiopia, Guinea, Malawi, Mali, Niger and Senegal – had met their commitments to spend 10% of their budgets on agriculture. Nevertheless, CAADP has changed the way in which national governments approach agricultural development by putting agriculture back on the front burner. In countries like Malawi, a refocus of support for smallholder farmers has helped to stabilise food prices and increase supply, despite setbacks to donor financing. While it is in the self-interest of African governments to meet, if not exceed, these commitments, they are partly swayed by donor apathy. The CAADP process picked up significant momentum after the announcement of the L’Aquila promises, and expectations of new financing prompted African governments to put in place plans designed to be co-financed by donors. However, if donor apathy towards meeting the L’Aquila promises wins out over political will for preventing hunger and reducing poverty, it is possible that some African governments could backslide.