ROUNDTABLE ON FINANCING AGRICULTURAL DEVELOPMENT IN THE NEAR EAST REGION
Doha, State of Qatar, 15 March 2004
Jointly Organized by the Islamic Development Bank and FAO
Roundtable on Financing Agricultural Development in the Near East Region
27th FAO Regional Conference for the Near East (NERC)
Doha, Qatar, 15 March 2004
1. The Roundtable on Financing Agricultural Development was held on 15 March, 2004 as a side-event to the 27th FAO Regional Conference for the Near East (NERC), held during the period 13-17 March 2004, in Doha - Qatar. The Roundtable was jointly organized by the Islamic Development Bank (IDB) and FAO. The purpose of the Roundtable was to discuss means to mobilise financial resources to meet the needs of the Near East countries to achieve sustainable agricultural development and food security and to increase investment in agriculture. The meeting was attended by 56 participants from 14 countries and several regional and international financial and developmental agencies. Delegations from several member countries attended, including representatives from ministries of finance.
2. Three technical papers were presented. The first two papers were presented by FAO and discussed “Trends and Issues in Financing Agricultural and Rural Development: World Experience”, and the issue of “Sustainable Agricultural Development Policies in the Near East Region: Challenges, Issues and Opportunities for Financing Agricultural Development”, respectively. The third paper, which was presented by the Representative of the Islamic Development Bank, focused on “Islamic Development Bank Financing of Agricultural projects: Opportunities and Constraints”. Fruitful and lively discussions were held by the participants.
3. The Roundtable looked at the different types of external resources available; factors affecting domestic resource mobilisation and allocation; and constraints to channelling funds for investment by farmers themselves. It discussed also the issues of absorptive capacity constraints and the role that governments in the Region could play in addressing these issues. Constraints to increasing investment at all levels were discussed, while means to ensure that investment funds actually reach farmers were stressed. The negative impacts of export subsidies provided by developed countries and other forms of distortions at the national, regional and global levels on agricultural investment in developing countries were also emphasized.
4. The Meeting noted that despite significant progress made over the last decade by countries of the Near East region in overall economic growth, poverty and food insecurity were still widespread in many countries of the Region.
5. The Meeting recognized that the Region needs to improve competitiveness of its agricultural sector and that the availability of cheap labour, close proximity to potential export markets and a reasonable natural resource base provided an excellent opportunity to increase agricultural exports to regional and European markets. It underlined that the key to improving competitiveness was to invest in physical infrastructure, human capital, and research and technology, since public and private investments can raise returns for agricultural producers or lower agricultural costs of production.
6. The Meeting stressed that the Region faced a serious water problem (both quantity and quality), which called for improving both the productive and allocative efficiency of water use, and formulation of clear statements of national water policy and national water resource management plans.
7. The Meeting was also convinced that hunger, or lack of access to adequate food, was one of the direst traits of poverty and that the concept of food security constituted an effective tool with which to target, design and monitor policies and initiatives for poverty reduction.
8. The Meeting noted that the Rome Declaration on World Food Security and the World Food Summit Plan of Action adopted at the World Food Summit of 1996 and the World Food Summit:five years later (WFS:fyl) in June, 2002, brought to the fore the global commitment to eliminate hunger and malnutrition and to achieve sustainable food security for all people, and that this global commitment was further reaffirmed in the Millennium Development Goals (MDGs) following the Millennium Summit in 2000.
9. The Meeting observed that agriculture’s contribution to economic growth and its role as a productive sector in the economy needed to be recognised and reflected in budgetary allocations. The Meeting also observed that agricultural growth had much more effect on poverty reduction than growth in other sectors.
10. It was also noted that although most investments were primarily mobilized by the farmers themselves, through their expenditures on agriculture, forestry and fisheries, the public sector played a critical role in providing incentives and creating an environment conducive to such investments as well as in ensuring sufficient availability of public goods (basic infrastructure, rule of law, peace and security);
11. The Meeting recognized in particular that mobilizing resources for agriculture is fundamental and must be supplemented by investment in infrastructure, education, health, safe drinking water, conflict reduction, good governance and market openness;
12. The Meeting was concerned that the role of government in support of economic activities in general, and agriculture in particular, has been scaled down over a decade due to financial crisis and reforms in most countries and that governments’ allocations of public resources to agriculture remained well below the share of agriculture in income and employment generation;
13. It was recalled during the Meeting that government spending on productivity-enhancing investments and natural resources conservation, such as agricultural research and development, irrigation and rural infrastructure (including roads and electricity), had a significant impact on growth in agricultural productivity while also contributing to poverty reduction. The Meeting recognized that enabling small-scale farmers to face the challenges of globalization would require special attention to rural capacity, institution-building and safety nets, as well as efforts to improve rural infrastructure, including roads, communications, marketing, transport, storage and processing facilities as well as ecological protection;
14. The Meeting agreed that one of the major challenges now was to translate budgetary expenditure into effective delivery of services and support for the agricultural sector. It also agreed that it would be useful for countries of the Near East to share experiences in mobilising resources for agriculture and ways of achieving effective delivery.
15. The Meeting recognized the need to explore possibilities for tapping civil society and private-sector resources, both managerial and financial, to contribute to the provision of infrastructure and social services. This should be done in a way that promotes service quality, expands access to the poorest, in particular to women, and at the same time maximizes the levels of public resources allocated to the provision of other non-commercial services, including safety nets, that are required to establish more just and equitable societies.
16. The Roundtable agreed that the most important issue in financing agriculture was to ensure that investment funds reach the farmers themselves. Also, the options for providing rural finance were discussed and all countries were called upon to facilitate access to finance by small and medium-sized enterprises through the provision of credit - particularly micro-credit and appropriate guarantee schemes.
17. The meeting called upon ministries of agriculture to work more closely with ministries of finance.
18. The Roundtable emphasised that financing institutions and development partners should streamline their own procedures in project processing, procurement, disbursement, and monitoring. The Meeting also stressed the need for closer collaboration among all parties concerned in the formulation of agricultural development and food security related projects, and that such collaboration should start from the early stages of project identification and formulation, including the possibility of joint formulation missions.
19. The Meeting stressed the usefulness of FAO support in the formulation of country and regional agricultural development and food security strategies and programmes commissioned by financing institutions and regional organizations.
20. The discussion identified the investment priorities in the Region to include: 1) future priority for investment in the water sector should follow a three-prong policy of water demand management, improving environmental water quality, and selected interventions in supply enhancement; 2) infrastructure for trade facilitation; 3) focus should be given to agricultural support services provided mainly by the private sector, with an important role for the government as a facilitator and provider of an enabling environment; and 4) establishment of a conducive policy environment including macro stability to reduce uncertainty surrounding investment; promotion of markets and to free relative prices to raise profitability of investment; implementation of a well-defined and effectively enforced code of property rights that would lower the cost of doing business; and promotion of adequate political institutions to foster social consensus and political stability.
21. The Meeting was convinced that there could be no hope of meeting the WFS target if the political will to direct sufficient resources to hunger reduction was not strengthened, and unless the resources required to put an end to hunger did exist.
22. The Meeting agreed that revitalizing the agricultural sector, including livestock, forestry and fisheries, required investment in crucial public goods and the creation of enabling conditions for private sector participation. Also, attention should be made in that regard to human capacity development, scientific research and technology transfer and other elements crucial to agricultural development in addition to combating constraints to agricultural productivity and efficient marketing, such as soil infertility, poor water management, inadequate infrastructure, pests and diseases.
23. The Meeting called upon countries of the Region to implement, as an urgent matter, policies and measures for agricultural and rural development, by mobilizing adequate resources for these sectors commensurate with their respective contributions to the national economy and capacity to contribute to reducing poverty, hunger and food insecurity. The commitments made previously by member countries of the Near East Region through other forums and initiatives (such as the NEPAD for the African/Near East countries) to increase investment in agriculture and rural development was noted.
24. The Meeting also agreed that all efforts should be made by all concerned to enhance consultations at national and regional levels with civil society organizations and other key stakeholders, including the private sector, women and youth associations, etc., aimed at promoting their active participation in all aspects of agricultural development and food production;
25. The meeting also called upon the member countries to intensify cooperation with FAO and development partners, including regional and international development banks, noting with appreciation the positive role they have played over the past years in support of agriculture and food security.
26. The Meeting highly commended FAO and the Islamic Development Bank for holding such roundtable, and requested FAO to consider holding follow up consultations/meetings with member countries and concerned financial institutes and partners-in-development to further spearhead the dialogue on related issues of financing agricultural development.
27. The Meeting requested FAO to consider the inclusion of financing agricultural development as a topic for discussion, or holding an additional follow up side-event on the subject during the next FAO Regional Conference for the Near East.