Investing in agriculture for a better future Jakob Skoet Agricultural Development Economics Division Food and Agriculture Organization of the United Nations OECD – Global Forum on Agriculture 26 November 2012 Paris
Investing in agriculture reduces hunger
Who invests in agriculture? Investments in agriculture in selected low- and middle-income countries, by source Billion constant 2005 US$ 180 160 140 120 100 80 60 40 20 0 On-farm Government Public spending Official Foreign direct investment in investment (79) on agricultural development investment (37) agricultural research and assistance (73) capital (79) development (45)
What drives what? 12
Agricultural capital stock and agricultural GDP per worker, by country
SVN
BRN LBN FRA
10 8 6
ISL
BEL HRV FIN LUX ITA SWE ARE ARGESP DEU BGR JPN MKD SAU GBR DNK MYS BLR ROU CHE KOR ARM URY DMA LTU LBY RUS CRI SRB IRN SYR EST IRL MUS GRC MNE TUR DOM BRA COL KAZ TUN NGA EGY UKR MNG VCT SLV BLZ NIC KGZ ECU POL ATG GAB HND DZA MEX GRD SUR PER CPV LCA FJI NAM WSM MDA PHL AZE TJK THA PAK LKA CIV GTM SWZ BTN BOL IDN PNG IND BWA MLI CHN LAO AFG KHM SLE VNM AGO CAF COM COG ZMB MRT GMB NPL ETH LBR BGD RWA KEN UGA SEN MDG GIN LSO TCD MWI ERI MOZ COD BIH
NLD
USA AUS
4
DJI
6
8
Low-income countries
10 Agricultural capital stock per worker (log scale)
Lower-middle-income countries
12
Upper-middle-income countries
14
High-income countries
How do regional trends differ? Average annual change in agricultural capital stock per worker in low- and middle-income countries, 1980–2007 Percentage change 1.2 0.8 0.4 0 -0.4 -0.8 East Asia and Europe and Latin America Middle East the Pacific Central Asia and the and North Caribbean Africa
South Asia
Sub-Saharan Africa
Can we be more specific? The world governance indicator and agricultural capital stock per worker
Worldwide Governance Indicator for Rule of Law, 2000
2
BRB BHS
CHL PRT
PRI ISR CYP GRC ITA KOR WSM CPV ARE CZE QAT POLKWT OMN CRI EST SYC VCTLCA BWA KIR BRN THA DMA KNA BHR TTO JOR SVK LTU MYS LVA MDV GRD NAM BTN HRV IND MAR ZAF SAU ARG BLZ GHA LKA SEN TONTUN MNG EGY LSO WBG BGR TUR STP GMB LBN PAN VUT SUR ROU GAB BOL BEN MRT BRA MEX NPL TZA VNM MDG FSM JAM IRN ARM SYR ERI CHN MHL MWI MLI DOM GUY PHL MDA BFAZMB FJI BIH PER MKD TGO SWZ ECU PRK MOZ SLV KGZ DJI BGD VEN UGA ETH IDN PAK GTM CUB LBY LAO KHM TCD NER NIC KAZ UZB HND COL KEN CIV PRYAZE BLR PNG DZA UKR TKM ALB GEO CMR NGA SRB GNQ RUS MMR RWA COM YEM GIN ZWE GNB SLE IRQ BDI CAF SDN COG TJK HTI AGO SLB
1
MUS
0
-1
-2
FIN LUX AUT NOR SWE ISL DNK GBR DEU IRL FRA ESP MLT BEL JPN CHE
NLD
COD
LBR
ATG
AUS
NZL CAN USA
SVN
HUN
URY
AFG SOM
6
8
10
12
Average agricultural capital stock per worker, 2000 to 2007 (log scale)
14
…
What is specific to agriculture? Doing Business Rank
Top ten (best business environment) Bottom ten (worst business environment)
Agricultural capital stock per worker, 2007 (Constant 2005 dollars) 18,500 6,100
Annual change in agricultural capital stock per worker, 1995-2007 (Percent)
2.4 0.3
Can we ensure investments with socially desirable outcomes? Share of rural population by size of land holdings in selected lowand middle-income countries Percentage of rural population
100% 80% 60% 40% 20% 0% Guatemala (42.3)
Kenya (1.2)
Smallholder
Malawi (0.9) Largeholder
Nepal (1.2)
Nicaragua (35.2)
No land holdings
Viet Nam (1.2)
Which public goods? Impact of public investments in terms of: Agricultural performance
Poverty reduction
CHINA
CHINA
CHINA
Agricultural R&D
Education
Education
Agricultural R&D Roads
Roads
Telecoms
Telecoms
Electricity
Irrigation
Poverty loans
Electricity
Irrigation 0
2
4
Rate of return
6
8
0
4
8
Number of people
12
Key messages Investing in agriculture is effective for reducing poverty and hunger and ensuring sustainability Farmers, as the largest investors in agriculture, must be central to agricultural investment strategies They need a favourable climate for agricultural investments But for many small farmers this is not enough, governments must: Help small farmers overcome barriers to invest Ensure that large-scale investments are socially beneficial
Governments must focus on investing in public goods with high returns
What do we need to know more about? • Q1: Who invests in what? What do we really know about sources and levels of investment in agriculture? • Q2: Can we be more specific about what contributes to a good investment climate for agriculture? Can empirical evidence provide guidance? • Q3: What are the key constraints to smallholder investment? • Q4: Which inclusive partnership models can help them invest? • Q5: Which public goods in what context? Priorities for different regions? Do we know enough?
The State of Food and Agriculture 2012 Investing in agriculture for a better future
Forthcoming, 6 December 2012, from FAO Website: www.fao.org/publications/sofa/en E-mail:
[email protected]
