PR 96/32 - FAO URGES INCREASE IN INVESTMENT IN AGRICULTURE


PR 96/32

FAO URGES US$31 BILLION A YEAR INCREASE IN INVESTMENT IN AGRICULTURE, MAINLY FROM THE PRIVATE SECTOR

ROME, 4 August -- The private and public sectors combined will have to invest an additional US$31 billion a year in agriculture over the next two decades in order to keep up with increasing demand for food in developing countries, the UN Food and Agriculture Organization said today.

FAO said that US$19 billion a year in incremental investments will be needed at the farm level and for post-harvest storage and processing and the remaining US$12 billion for expanded rural infrastructure and rural social services.

The Organization made the estimates in "Investment in Agriculture: Evolution and Prospects," one of a series of provisional technical papers prepared for the World Food Summit to be held 13-17 November at FAO headquarters.

Leaders of close to 200 countries attending the Summit are expected to renew their commitment to the goal of poverty alleviation and universal food security and agree on a plan of action to be implemented in partnership with international and non-governmental organizations and other sectors of civil society.

The report on investment called farmers and other private investors "the key to rising food output."

"Nearly three-quarters of the future investment needed in the developing countries would, as in the past, consist of private commitments by farmers for land improvement, new equipment, expansion of livestock herds and plantations, often in the form of family labour, and for private investment in the post-production chain," the report said.

"The remaining quarter, representing about US$41 billion per year, will consist of complementary public investment to create and maintain the conditions for profitable private sector agricultural investment.

"If external multilateral and bilateral financial support for these public investments were to provide the same share as in the past, i.e., around one third overall, external commitments would need to rise by some US$5 billion per year, from presently US$10 billion to US$15 billion annually, i.e., to the level already attained in the late 1980s."

The report said that government institutions may have to be restructured to play a new role of "as facilitators and partners in an agricultural sector dominated by private investment."

Explaining the need for increased investment, the report said new approaches to food production will have to be found because global reserves of still unused arable land are dwindling, the gains achieved by green revolution technology are reaching a plateau and degradation is rising on both good and marginal land.

The report called for "substantial investment" in irrigation, land improvement, new machines, livestock breeds and labor to allow farmers to apply new technology being developed by research establishments.

Further investment will be necessary, it said, to supply farmers with new types of inputs, crop or animal breeds and machines and for processing, markets and storage, to build infrastructure linking producers to the cities and to provide social services that will allow rural people to make use of the new opportunities to produce and earn.

Noting that agriculture is the main employer in most low-income food- deficit countries, the report urged policies "to remove disincentives to farmers and other rural investors, favour job creation, slow unmanageable urban migration and improve rural financial markets."

It called for "a sharper demarcation between public and private tasks" with government expenditure reserved for public goods, essential social services, targeted poverty reduction and food assistance.

The report also urged governments to strengthen their commitments to regional cooperation in resource management, new technologies and trade. It said action at the global level is required to avert the potential threat to food security posed by the narrowing of plant and animal genetic diversity, global warming, ozone depletion, deforestation and desertification and to find "desperately needed" new forms of sustainable agricultural intenstification.

Reviewing the pattern of investment priorities by area, the report said:

  • Asia needs investment in research to overcome micro-nutrient deficiencies in its populations, irrigation rehabilitation coupled with more efficient, decentralised water management and possibly the creation of tradeable water rights is a high priority. Environmental rehabilitation and protection and investment in marketing infrastructure for growing urban areas are also needed.
  • Africa needs heavy investment in rural communications, infrastructure such as irrigation and rural roads, simple water capture and on-site harvesting facilities to exploit rainfall, land management and improvement, education and health services. High potential areas can make use of already available research results, but systematic research is still needed to create new, sustainable farming systems for the predominant small, resource-poor farms.
  • Latin America, with land reserves still available, can expand agriculture through the use of mechanised farming. It needs rural finance markets, market-based land reform and substantial investment in marketing and processing infrastructure for a population expected to become 80 percent urban.

The report said that rural areas in all regions are under-equipped with the social infrastructure needed to enhance the most important productive resources, human capital."

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For further information please contact:
John Riddle
Tel: (396) 5225-3259
Fax: (396) 5225-3699
E-mail: john.riddle@fao.org

The full document is available on the World Wide Webb by clicking on: http://www.fao.org - then click on World Food Summit, next click on Summit Countdown, then on Documentation. There you will find all WFS documents.