Innovative financing for agriculture, food security and nutrition

Dear Forum Members,

Reaching the goal to feed a growing world population is threatened by an important lack of investment in agriculture and a decreasing Official Development Assistance (ODA) in agriculture. To tackle this issue, Innovative Financing Mechanisms (IFMs) are being discussed as a means to complement ODA without replacing it to provide reliable and predictable financing for development and specifically for agriculture and food security and nutrition, especially by catalyzing and encouraging new projects.

At its 9th plenary session in Bamako in June 2011, the Leading Group on Innovative financing for Development considered that innovative financing has the potential to contribute to increase funding for agriculture, food security and nutrition. An International Task Force was established.

The Task Force, supported by an Expert Committee, is expected to produce a report by the end of 2012 which will be presented to the 11th plenary session of the Leading Group on innovative financing for Development.

The objectives of exploring Innovative financing for Agriculture, Food Security and Nutrition, are two:

  1. Extension of solidarity taxes to agricultural development and food security. 
    In July 2010, the report of the Leading Group on the tax on financial transactions proposed the introduction of a 0.005% levy on currencies transactions that could generate some US$ 50 billion per year to be used for development purposes. Nowadays, the debate is on a possible tax on financial transactions to face the credit crunch. The objective of the present exercise is to advocate the use of a fraction of the resources raised in such a manner for agriculture and food security. For this reason, innovative uses of funds need to be identified.
  2. Identify/Expand mechanisms that catalyze private investment across the agricultural value chain.  Given the significance of private actors in the agricultural value chain, the combined use of resources from solidarity taxes, particularly the tax on currency/financial transactions, together with the use of traditional ODA funding,  may achieve significantly greater impact by catalyzing banks and other investors, for example diasporas, to invest in smallholders and Small and Medium Enterprises (SMEs) and to support development of national financial markets (such as local bond markets that raise funds for agricultural infrastructure). 

This online discussion should promote an exchange experiences and opinions within the largest possible audience in the area of agriculture and food security. Inputs received will be used in the preparation of the report that will be submitted to the 11th Plenary Session of the Leading Group on innovative financing for Development.

The literature and debate on Innovative Financing Mechanisms has by now become impressive and some of the proposals are listed in the Annotated List for ease of reference.

Questions submitted to the FSN members:

  1. What would be innovative sources (public and private) of financing  for agriculture, food security and nutrition? New taxes are normally suggested, as can be seen in the annex. Without excluding them, we would like to explore other options.
  2. What would be innovative uses of funding generated by mechanisms of innovative financing ? What should be their core target(s)?
  3. What could be new and suitable innovative financing tools for leveraging private investments  for agriculture, food security and nutrition? And what could be their advantages/drawbacks?
  4. How could these identified tools or mechanisms be used for innovative areas of agriculture, food security and nutrition (e.g. climate smart agricultural practices, research, migration)?
  5. Which actors/stakeholders - at the various levels - would be relevant to mobilise and implement such instruments?  What would be their roles and interactions with each other?

Please feel free to share with us any relevant material and/or publications to feed the on-going reflexion on this topic. 

We thank you in advance for your time and contributions as they will contribute to refining our assessment and prospective work.

We hope this discussion will facilitate knowledge sharing, communication and effective learning from your experiences on innovating financing mechanisms and relevant uses for enhancing financing for agriculture, food security and nutrition.

Maurizio Malogioglio
Marie-Caroline Dodé
Géraldine Tardivel

Esta discusión ha sido cerrada. Por favor, póngase en contacto con para cualquier información adicional.

Géraldine Tardivel FAO, Italy

Dear all,
We are grateful to the “second round” of contributors to their participation in the discussion.
A summary will be prepared in the next days including new ideas and areas of further analysis proposed.
The 28 contributions received have enriched the discussion with a diversity of points of views, coming from 12 countries and 5 continents. While the majority of contributions are from Europe (46%), Africa ranks second (23%) followed by North America (15%).
Participants also represent several different sectors in a quite uniform proportion, ensuring complementary views on the issues raised in the discussion: governments, farmers associations, local and regional authorities, universities, international organizations, private sector and nongovernmental organizations.
This wide range of stakeholders engagement is essential to feed into the reflection of the international group of experts which will deliver its report to the Pilot Group on innovative financing in December.
Again, we would like to thank you very much for your participation and relevant contributions!
Maurizio Malogioglio
Marie-Caroline Dodé
Géraldine Tardivel

Adèle Irénée

Bonjour à tous

Mon intervention est beaucoup plus axée sur l’Afrique

Pour répondre à la question « Quelles sources innovantes (publiques et privées) de financement pour l’agriculture, la sécurité alimentaire et la nutrition pourraient être envisagées ? »

-Je vais axer mon intervention sur le financement publique. Je voudrais mentionner ici que dans le cadre du Programme Détaillé pour le Développement de l’Agriculture Africaine (PDDAA), à l’initiative de l’Union Africaine et du NEPAD, les gouvernements des pays africains avaient décidé d’allouer 10% des budgets nationaux au secteur agricole. Le Comité d’experts internationaux devrait le rappeler clairement dans son rapport de décembre 2012.

Autre possibilité : sensibiliser les industries agroalimentaires d’utiliser les matières premières locales. A cet effet, les industries devraient financer la production, pour permettre aux agriculteurs d’augmenter leur capacité de production.

Afin de garantir la qualité des matières premières, les industries devraient financer la recherche agricole.

-Concernant la question « Comment utiliser de manière innovante les fonds générés par les sources innovantes de financement ? Quelles devraient en être les principales cibles ? »

Je propose à ce que les fonds quelque soit leur source soient attribués à la recherche (développement des semences à haut rendement et techniques de cultures performantes, développement de nouveaux produits,…) et à l’éducation nutritionnelle. Car les entreprises privées ont souvent tendances à intervenir beaucoup plus dans la recherche.

-Quels sont les acteurs ou parties prenantes clés – aux différents niveaux – pour mobiliser et mettre en œuvre lesdits instruments? Quels seraient leurs rôles et interactions? A cette question, je pense que chaque pays africain dispose d’un système national de recherche agronomique (SNRA) qui regroupe tous les acteurs (chercheur, industriel, ONG, producteur, décideur). Chaque SNRA pourra s’impliquer d’avantage dans la stratégie de développement agricole. L’implication des associations féminines à vocation agricole serait un atout majeur.

Adèle Irénée GREMBOMBO
Ingénieur Agronome Nutritionniste
MSC Nutrition Humaine et Santé Publique
Paris (France)

Ms. Noemie Gerbault ORU-FOGAR Core group sécurité alimentaire, France

Note de l’ORU-FOGAR et de son Core group sécurité alimentaire, présidé par la Région Basse-Normandie (France) avec la participation de son comité scientifique : Philippe Godin (Agroéconomiste), Hélène Hollard (Réseaux des agroécologistes), Jean-Paul Pellissier et Julien Frayssignes (CIHEAM-IAMM)

Le Core group sécurité alimentaire de l’Organisation des Régions Unies/FOGAR (Forum Global des Associations de Régions) recense depuis 2010 les actions menées par ses Régions membres, visant à lutter pour la sécurité alimentaire, au travers de coopérations régionales. Des exemples concrets de financements innovants visant la pérennité des projets grâce à la responsabilisation et l’augmentation de l’indépendance financière des acteurs sont présentés ci-après.

1/ La formation en alternance

Le Centre de formation de techniciens-animateurs ruraux (CEFTAR) de Tamatave à Madagascar a été initié par le biais d’une coopération entre la Région Basse-Normandie en France et la Région Atsinanana à Madagascar, avec une mise en œuvre par les Maisons Familiales Rurales (MFR). Il s’agit d’un centre de formation en alternance, accueillant des stagiaires souhaitant devenir techniciens formateurs agricoles.
Sources de financement et cibles
Les entreprises et associations de la Région Atsinanana financent la formation de leurs employés stagiaires. A Madagascar, convaincre un professionnel d’investir dans l’humain par le biais de la formation, est un concept innovant. Des salariés de différents organismes peuvent être intégrés à la formation. Une bourse d’étude est apportée par la Région pour soutenir le projet et encourager les entreprises à financer la formation de leurs salariés.
Outils et mécanismes de financements innovants
A terme, la formation en alternance permettra de financer la formation (enseignants, hébergement et nourriture) sans financements extérieurs. Ce mécanisme favorise l’ancrage sur le territoire et vise à aller vers une autonomie croissante du centre de formation.
La formation apparait être un moyen de démultiplier les bonnes pratiques par la formation de formateurs. Les stagiaires gardent le lien avec l’entreprise, peuvent échanger sur des sujets concrets et des problématiques du territoire. Cette formation agit de manière pérenne sur le territoire. Les fonds mobilisés pour former les techniciens impactent directement le territoire.
Par ailleurs, les exportateurs font des marges importantes sur les produits de rente (vanille, girofle …). Des taxes pourraient être prélevées par l’interprofession sur la filière pour permettre sa structuration. La création d’un fonds d’investissement de l’interprofession permettrait de cibler les investissements selon les besoins (aménagement rural, formation …). Ces besoins pourraient être recensés par un observatoire.

2/ Des pratiques agricoles novatrices

Le programme pisciculture paysanne a été initié par le biais d’une coopération entre la Région Basse-Normandie en France et la Région Atsinanana à Madagascar, avec une mise en œuvre par l’APDRA (Association Pisciculture et Développement Rural en Afrique tropicale humide) Pisciculture paysanne. Il s’agit de proposer un appui technique aux paysans souhaitant construire un étang-barrage permettant l’élevage de poissons.
Sources de financement et cibles
Le programme est financé par l’Union européenne et les Régions partenaires. Il permet la mise en place d’un système innovant de pisciculture, adapté au territoire, comme expliqué ci-dessous.
Outils et mécanismes de financements innovants
Les petits paysans, propriétaires de terres adaptées à la mise en place de ce système « étang-barrage », peuvent bénéficier de l’appui technique de techniciens piscicoles. La construction de l’étang-barrage nécessite du matériel rudimentaire, et peut donc être conçu par la population locale.
Une des conditions pour bénéficier de l’appui est que le paysan soit entouré d’un groupe (villageois, famille …). L’approche groupe favorise l’appropriation des pratiques techniques et la réalisation des travaux par la mutualisation de la main d’œuvre, et également la mise en commun du matériel et des intrants (alevins). Cela permet une économie d’échelle et une réduction des contraintes quotidiennes. Un pisciculteur isolé fait difficilement face aux imprévus (aléas climatiques ou autres).
Le financement de l’étang-barrage est à la charge du paysan ; cela permet d’impliquer les acteurs locaux et d’intégrer l’action sur le territoire. Seul l’appui technique est financé par des sources extérieures et apporté aux paysans pendant les années de mise en place du projet. Ce mécanisme de financement vise à terme l’autonomie des propriétaires d’étang-barrages.
Un fonds de réserve provisoire a été mis en place par l’APDRA, le temps d’adapter le système d’élevage aux conditions géo-climatiques de la zone. Ce fonds de réserve était prévu pour dédommager le paysan dans le cas d’un imprévu, le temps de la phase d’adaptation du projet sur le sol malgache.
L’objectif de ces actions est qu’elles puissent être financées à terme sans moyens extérieurs.

L’agroécologie, par son approche globale, prend en compte les aspects environnementaux, sociaux, culturels et économiques. Elle permet aux personnes d’être autonomes et de réduire fortement l’utilisation des intrants industriels, que ce soit pour la conservation des sols, la gestion de la matière organique et de la fertilité, la santé des plantes, les semences, la gestion de l’eau… Ce renforcement de l’autonomie financière s’acquiert grâce à des pratiques comme l’agroforesterie, le compostage, la couverture des sols. Ces techniques sont performantes sur le plan agronomique, mais aussi sur le plan économique et humain, et pour la nature, par exemple pour maintenir la biodiversité. Tous ces aspects font de l’agroécologie une pratique hautement innovante, y compris d’un point de vue économique.

3/ La valorisation territoriale

Deux concepts issus du projet "Novagrimed – Innovations Agricoles en Territoires Méditerranéens" peuvent constituer une base de réflexion sur les financements innovants (partenaires : IAMM, Régions de France, Italie, Grèce et Espagne) : le concept de District Agroénergétique Durable et celui de Bio-Itinéraire.
Sources de financement et cibles
Le travail mené sur la thématique agroénergétique a permis d'aboutir à l'élaboration d'un document stratégique et méthodologique relatif à la définition et à la mise en œuvre d'une démarche de production et de distribution d'énergie à l'échelle locale à partir de l'activité agricole (biocarburants, biomasse, effluents d'élevage…). A partir d'une coopération renforcée entre les composantes d'un territoire (agriculteurs, entreprises, autorités locales, organismes de formation et de R&D, association, société civile), l’initiative vise à répondre aux problèmes fréquemment posés par un développement trop important des cultures agroénergétiques (concurrence avec les cultures alimentaires, intensification). Le district agroénergétique apparaît comme un outil de référence innovant.
Inscrit dans une logique de développement intégré, le concept de "Bio-Itinéraire" est fondé sur une mise en réseau de différents partenaires sur un territoire donné : agriculteurs, professionnels du tourisme, autorités locales, artisans, associations… Il s'agit de valoriser à des fins pédagogiques l'ensemble des ressources d'un territoire : paysages, pratiques agricoles, savoir-faire, patrimoine culturel, ressources naturelles, de créer une dynamique de développement à l'échelle locale et de mettre en place un outil de concertation et de médiation entre le monde rural et les consommateurs urbains.
Outils et mécanismes de financements innovants
Ces concepts renvoient à des politiques intégrées vouées à s'adapter à des contextes territoriaux différents (notion de "sur-mesure" plutôt que de "prêt-à-porter"). Ils nécessitent de ce fait des modes de financement innovants relevant eux aussi d'une logique territorialisée. La valorisation de ressources spécifiques, c’est-à-dire non reproductibles, peut par exemple être identifiée. Dans un contexte de concurrence accrue, les territoires ruraux ne peuvent fonder leur stratégie uniquement sur une logique de coûts, mais doivent également mettre l’accent sur des démarches de différenciation.
Il pourrait être développé une approche sur la question du financement des politiques territorialisées "globales" ou "intégrées" visant à renforcer, directement ou indirectement, la sécurité alimentaire des populations résidentes.


Les Régions, par leur rôle d’« ensemblier » et une approche territoriale du développement, permettent la mise en relation d’acteurs du territoire pour la mise en place d’actions ancrées sur le territoire et répondant aux besoins concrets des populations.

Le Core group « sécurité alimentaire » souligne la nécessité de prendre en compte l’ensemble des acteurs tout au long de la chaîne alimentaire, de la production à la consommation, voire même à la gestion des déchets : la réduction des pertes et des gaspillages est source d’économie et de financement pour les paysans. L’ingénierie est à imaginer concrètement au cas par cas avec les différents acteurs, au niveau de la Région.

L’approche territoriale du développement vise à construire avec les acteurs concernés des programmes intégrés au territoire, où s’impliquent tous les acteurs de la chaine (producteurs, usagers, services publics, secteur privé …). Cette approche permet de cibler au plus juste les mécanismes de financement. Par conséquent, l’aide est utilisée de façon optimale et les pertes financières sont limitées.

Etienne du Vachat Action contre la Faim - ACF (Action Against Hunger), France

Dear all,
Action contre la Faim - ACF (Action Against Hunger) would like to contribute to the consultation with the below inputs. Please do not hesitate to get in touch with us for any further information.
Etienne du Vachat - ACF Food Security Advocacy Officer

Contribution from ACF (Action Against Hunger)

Q 1. What would be innovative sources (public and private) of financing for agriculture, food security and nutrition? New taxes are normally suggested, as can be seen in the annex. Without excluding them, we would like to explore other options.

R1. In terms of innovative sources of financing we would like to suggest three areas to be looked at:
- a tax on agricultural commodity derivatives markets, especially wheat, maize, soy and sugar, with a ‘double effect’ tax. The currently high and volatile food prices are strongly driven and accelerated by speculation on agricultural commodity markets. This is especially the case with derivatives markets where complex financial products (such as futures, swaps, etc.) are exchanged without any actual exchange of commodity in the physical markets. As for the Tax on Financial Transaction (TFF) in the currency and financial markets, a very low tax rate would decrease the profitability of the most speculative positions, which are often very short-term oriented. This first effect would contribute to lower the speculation opportunities in agricultural markets and could thus have a positive impact on price stability, with a first positive effect on the capacity of poor communities to access food at affordable prices throughout the year. The second effect will be the yearly generation of billions USD of additional innovative funding by the tax. The use of this money would contribute to increasing agriculture, food security and nutrition investments.
[Note: A “derivative‟ is a financial asset whose value is derived from the value of one or more underlying assets, such as commodities ; "Speculation" (as opposed to hedging) refers to transactions by financial participants (like investment banks and hedge funds) who do not have a commercial interest in trading the underlying commodity but, rather, are taking on risk in order to make a return on price changes. This can be contrasted with commercial participants (like food producers, processors or end users) who do have a real interest in trading the underlying commodity and can be described as ”bona fide” hedgers. Source: Oxfam]
- voluntary contributions from private agro-food companies. This is an option to increase private sector’s financial contribution and involvement in the development sector. Here we would like to suggest a “marketing” oriented approach with a logo and a label to be put on all kind of food products. This would fit the criteria of the focus on those economic sectors which have benefited the most from globalization. The companies (including restaurants, restaurant chains, distributors, whole sellers, food companies, etc.) would commit to giving a given percentage –e.g. 5 or 10%– of the income they make on those specific labeled products to the agriculture, food security and nutrition innovative funding mechanism (IFM). This label would be very visible for consumers but the contributions would not rely on the final consumers. The companies could also benefit from this initiative and gain an improved image in the public. The spectrum of products could be wide, however the logo and label should be easily distinguish from the fair trade’s ones.
- a specific tax on those food products whose role in or contribution to increasing children and adult over-nutrition is scientifically established and publicly recognized (especially fat- and sugar- rich products). This tax would help to make a link between the over-nutrition (both in rich and developing countries) and under-nutrition issues. In this mechanism, the tax will rely on the final consumer making it more expensive to consume processed food products, especially products that are rich in sugar or fat. The income generated by the tax will then be invested in the fight against undernutrition in developing countries, with a specific focus on the 36 high burden countries identified by the SUN movement.

Q 2. What would be innovative uses of funding generated by mechanisms of innovative financing ? What should be their core target(s)?

R2. In terms of use of the funding, the main goal and core target should be the 55 million of children threatened by acute malnutrition. The fight against child undernutrition is one the main scandal of our time and one of the most urgent causes worldwide. It is not debatable whether children suffering from severe acute malnutrition actually need help or not. They do. Innovative funding mechanisms to agriculture, food security and nutrition should primarily focus on this goal.
Under the SUN (Scaling Up Nutrition) framework, the international community has an outstanding opportunity to scale up funding to nutrition within an already existing, consensual, multi-actor and multi country framework.
SUN has identified 13 direct interventions that have proven their effectiveness in fighting undernutrition (see below). The costing exercice (World Bank report, 2010, ‘Scaling-up Nutrition: What will it cost?’) has resulted in an estimated need amounting at 12 billions USD per year needed to tackle undernutrition in the 36 countries with the higher undernutrition rates (“high burden countries”). The biggest advantages of this use of innovative funding is that there is an already existing initiative, quite consensual, with national platforms involving a wide range of actors including civil society.
The 13 key nutrition interventions the innovative funding mechanism to agriculture, food security and nutrition should focus on:
Behaviour change interventions
1. Breastfeeding promotion and support
2. Complementary feeding promotion
3. Handwashing with soap and promotion of hygiene behaviors
Micronutrient and deworming interventions
4. Vitamin A supplementation
5. Therapeutic zinc supplements
6. Multiple micronutrient powders
7. Deworming
8. Iron-folic acid supplements for pregnant women
9. Iron fortification of staples
10. Salt iodization
11. Iodine supplements
Complementary and therapeutic feeding interventions
12. Prevention or treatment of moderate malnutrition in children 6–23 months of age
13. Treatment of severe acute malnutrition

Q 3. What could be new and suitable innovative financing tools for leveraging private investments for agriculture, food security and nutrition? And what could be their advantages/drawbacks?

R3. In order to leverage more and better private investments for agriculture, food security and nutrition, the focus should be on the millions of small-scale family farmers (who are the main investors in developing countries’ agriculture) because they are the first hit by rural poverty, hunger and undernutrition. Innovative financing tools could act as complement, insurance or guarantee for their own investments in their own lands and livestock, to improve production and productivity, to reduce the risks they take and to support introductions of innovative methods of production. Other mechanisms such as drought and weather indexed insurance systems should also be looked at if they are primarily targeted at small scale farmers and pastoralists.

Q4. How could these identified tools or mechanisms be used for innovative areas of agriculture, food security and nutrition (e.g. climate smart agricultural practices, research, migration)?

R4. The legitimacy and transparency of innovative funding mechanisms (IFM) are crucial. For a stronger legitimacy of IFM to agriculture, food security and nutrition, it is important that the expense mechanisms (in terms of focus, governance, modalities, actors, programmes, etc.) are highly consensual, transparent and accountable (for instance through regular public accountability reports). The governance body of the initiative in particular should be multi-actor, rely on existing initiative and associate civil society organisations.
The CFS’ Global Strategic Framework (GSF) currently identifies many consensual topics in the field of agriculture, food security and nutrition policies, which have gained the common agreement of the various stakeholders (as opposed to the ‘gaps’ areas, still under debate at international level). In a sector where private companies’ interests are huge and where ongoing trends in research are highly debated, it is important that the “innovative areas” are defined and agreed upon in a legitimate, multi-actor recognized international arena such as the CFS.

Q 5. Which actors/stakeholders - at the various levels - would be relevant to mobilise and implement such instruments? What would be their roles and interactions with each other?

R5. The CFS (Committee on World Food Security) could host the governance of such a mechanism. Involvement of national governments (recipients as well as donors) is crucial, while civil society should also participate.
The SUN initiative would promote an existing frame to implement the innovative funding instruments. The funds should be channeled through transparent and accountable mechanisms, whether the States (especially in those countries where donors have a positive evaluation of their direct budget support) or non-state actors (local, international NGOs or private actors, as long as the same transparency and accountability criteria applies).

Lizzy Nneka Igbine Nigerian Women Farmers Association, Nigeria
Lizzy Nneka

Dear All,
It is a big question; Innovative Financing for Agriculture and Food Security is going an extra mile in financing capability.
IFMs are a possibility as long as governments commit the right percentage of the countries budget.  
Another new avenue would be financing by Agriculture Co-operative Associations Institutions well articulated and geared toward this purpose, as it happens for cooperatives in other sectors.

The unexplored avenues that have great potential is the Corporate Social Responsibility (CSR). This is an avenue where corporate organizations (including National and Multinational companies) give back to society what they have taken. Many of this organizations are out there and willing to give.

The setback is do famers know of the existence of this opportunities?
The most important things to do in Agriculture in my opinion is for the powers in the administrations to give room to farmers freedom from slavery poverty; this calls for authorities to allow the integration of every farmer no matter the gender in the cause of governance in Agriculture  and encourage low interest lending.

Farmer groups will be well positioned to seek and asses the funds out there for Agriculture, Food Security and Nutrition purposes.

Lizzy Igbine.(Mrs.)
National President
Nigeria women AA farmers association.


-    The Public Sector
-    Private Sector
-    Producer Originations
-    Philanthropic Organizations
These are some of the investment that influence agriculture. 

The public sector is one component which adds to the adverse effects of food security they come as business people with money to buy agricultural produces from framers at a much reduced price. Since farmers are desperate for money, may end up selling their produces at low cost prices. With this trend the farmers may not be able to realize maximized profit from their labour. The other component is government delay to purchase agricultural produce on time, which forces farmers to sell their crops to scrupulous business men.
In partnership with the private sector, farmers will grow crops which will largely benefit those who buy from them. The lending schemes will also share the cost investment. Not only that, the farmer may also pay back with interest charged at higher rate. The producer organizations have got many challenges they may formulate cooperatives which help farmers to get farming inputs and there are faced with a problem of transportation of inputs to the farmer’s depot. When selling these merchandise, the traders will not over look the incurred cost such as transport costs. The merchandise is in form of fertilizers, seeds, chemicals and machinery or agricultural equipment. 
Philanthropic organizations have policies that affect farmers by their lending policies. Farmers get loans but the cost of paying back is not calculated in accordance with the farmers input costs, as a result farmers end up paying back more to their lending institutions.
In the Sub-Saharan countries which include Central Africa, West Africa and Southern Africa and developing countries are equally facing similar challenges as stated above.
High cost of fertilizer, chemicals and seeds are also challenges affecting the farming industry, as a result they can not compete in the agriculture industry adequately or engage in meaningful agriculture unless there are incorporated in small scale farmer’s empowerment schemes. The growth of the small scale farmers has to start by first providing necessary incentives to kick start their development.
To producer organization, there is also this aspect of monopoly especially to producers of chemicals like fertilizers, animal feed, and agro-equipment. If there can be diversification of in the manufacturing of fertilizer and other agro-farming input, it will mean that the farming inputs will be in abundance hence the cost of farm input will be at a reasonable cost where farmers will be able to access it at affordable price. 

Private sector

Private sector looks at a former’s needs in the following areas:
Transport aids from farms to selling points 
Access to acquiring of big machinery like tractors which is only accessible by commercial farmers
This is disadvantaging small scale farmers because the rate of production will be limited to the equipment they are limited to us.
If a tractor can be given a corporate group of small scale farmers who are in a group of ten to fifteen members and to such a group should be loaned with one tractor per group.

- These groups will be headed by a cooperative coordinator who has to manage the equipment in providing services to these farmers.
- The coordinator has to strictly monitor each individual farmer. He also has to maintain servicing of the equipment.
- Educate farmers in looking after their crops and animals
- Also provide vaccination programs for livestock animals
- Constant monitoring of diseases control of animals
- Provide clean water and sanitation
- Train farmers in modern agricultural methods
- Provide transport facility to rural based farmers
- Improve road networks to make transportation easy by building small bridge
- Provide energy in form of solar generator and solar panel

Farmers who are located in remote areas have 70% percent of their crops go to waste because of luck of quick processing plants. To this effect, there is need to extend energy direct to farmers so that they can easily process food produce into finished processed foodstuffs. This will reduce waste of crops and transport cost to farmers.   
Mostly farmers face problem such as disease outbreak which the agricultural officer may not be able to cater for all the livestock farmers in providing control measures to their animals, as a result, animals die in masses. Therefore the private sector should come on board such as NGOs to supplement short full of disease control and other facilities needed for farmers.
 Governments of African countries are ready to work with private partnerships to alleviate poverty and increase food productivity by ensuring that farmers are able too access information and agricultural facilities.
These factors if provided to the farmers, food security will be improved at a greater percentages, also the living standard of farmers will greatly improve which is an objective realized.

Agnes Luo Laima
Zambia National Marketers Credit Association (ZANAMACA)
Lusaka – Zambia 

Jérôme Bossuet International Crop Research Institute for the Semi-Arid Tropics, France
Jérôme Bossuet

Dear All,

As innovative financing source for smallholder agriculture, I don’t think social entrepreneurship and social impact investments (eg Acumen Fund, Voxtra,...) were mentioned.

NGOs such as International Development Enterprises India (IDEI) have developed micro-irrigation technologies specifically adapted to the needs of poor smallholder farmers. 90% of farmers are rainfed. Private irrigation companies were not investing in developing products adapted to poor small farmers because initial investments (R&D, marketing, distribution) were considered too high compared to expected returns. Governmental subsidies programmes are not fit to poor remote farmers.
International Development Enterprises India follows market-driven pro-poor development approach to scale up agricultural innovations adapted to smallholder farmers in a mixed public-private business model.
IDEI has developed new technologies taking into account the needs of such farmers : low-cost, easy to maintain, small-scale (from 20 to 1000m² drip systems for instance). The initial stages (R&D, marketing and set up of local supply chain) need initial support from foundations / grants to create a local demand and a local supply chain... The idea is that after several years of maturation, the market is created and is financially sustainable. A new rural economy is developed. Like in the North where we have public support for start-ups.

Base of the Pyramid (BoP) Approach is also used by some corporate companies to address undeserved population. Either it is part of their CSR or totally integrated in their business. Unfortunately most of the initiatives are not for the rural poor.

About Payments for Environmental Services mentioned by several contributors. We may separate global public goods (eg mitigation efforts against global warming – carbon credits ) and local public goods (eg forestry protection, water...). Different scales, different management and financing mechanisms. CDM is for large-scale projects and it is a challenge to customize carbon credit for smallholder agriculture. You need big numbers, and good methodology to reduce the cost of certification while not damaging the credibility. The nascent carbon markets should give a share for the poor households as a leverage for development - IDEI one of the first NGO to get carbon credit for smallholder carbon-reduction technologies (treadle pump – 60% of buyers were using diesel pumps before). They are involved also in an interesting pilot initiative, called Water Benefit Partners , a project supported by First Climate and SDC to see if water credit can be a new source of financing for non-for-profit water projects [as mentioned by Suman KA] Water benefits Certificates are a kind of “currency” to finance water projects according to the impact on water footprint / water access to the poor.

Question : how can the developed countries develop social impact investment funds, and is there a risk to withdraw fundings from traditional aid towards these new funds? Or corporate sector using this “positive “labelling for social washing? Look at SRoI network to see what standards are built for social investment.

For such environmental and social good markets, it is essential to build a strong accreditation / certification system to ensure the seriousness of such “ethical markets”. With social media, you can see more and more initiatives drawing private donations and low or zero-investment for great projects / ideas to tackle social problems such as food insecurity / rural poverty. The increasing fair trade market shows there is a market for ethical goods. IDEI 20 years experience shows that farmers are willing to pay for impactful equipment (on average IDEI’s technology brings 400$ additional annual income for the farmer, a doubling of income), but to help the set up of social enterprises you need appropriate funding for such organisations. When you see many development programmes failing after closing down the funding, it would be good that donor communities think about developing more social impact investment lines for “risky ventures” dealing with rural poverty.

To leverage private investment for agriculture/FS/nutrition for the Base of the Pyramid; there is a part of change behaviour of the consumer I believe (communication / PR to promote more ethical approach of corporate so that “being more social” becomes a competitiveness factor ... big companies fear about negative publicities ) and part of public policies (eg obligation of a percentage of sustainable development / social impact investment for stock-exchange companies).

But public spending in developing countries towards smallholder farming has to increase as well. See how the Maputo Declaration target of 10% public spending in agriculture is not yet fulfilled in many countries in Africa, after nearly 10 years, although more than 70% of active population depends on agriculture. Investing in farmer’s organisations, lobbying operations such as One’s petition to give the rural poor a voice is very important for the years to come I believe.

Last thing, about agriculture research and innovative financing, I wanted to mention also the recent CGIAR reform for better coordination and work in partnerships of global agricultural research programmes ; CGIAR research programmes are now more impact-oriented on smallholder farmers and to scale up innovations / research outcomes such as microdosing, bio-reclamation of degraded lands or agroforestry practices, various public-private partnerships are experimented. Innovative financing go hand to hand with innovative partnerships. For instance, encourage the private sector to invest in BoP programmes, eg private seed or fertilizer companies experimenting small packets approach to respond to the needs of smallholder farmers. [attached is my contribution with useful internet links - the copy and paste seems not accepting the form and links]

Mr. G K shukla Development/ Environment Specialist India, India

Dear all
This is a time for moving beyond the general concepts to more concrete policy proposals that illustrate – without prescribing – how alternative policy sets can contribute to a greater growth model for food and agriculture . In this context, particular attention will need to be paid with a concept of Scenario Planning in context of the developing countries as well as developed ones, which can guide for a long-term funding for agriculture.

Over time, this process could become a tool to increase collective knowledge about the best suitable and sustainable option which can adaptable for all global economies easily. It would be a way for countries to measure their own progress relative to others and learn from the experience of others. Most importantly it would be a step towards reframing growth to better account for agriculture assets and the risks that could ultimately undermine economic growth and development.
The process of scenario planning has already been used in Indian context and here It will be good to mentioned the same. The process has the following important steps:
• Identify driving forces. Taking into consideration the global political conditions, economic developments, social developments, environmental, trends, and technological changes, assessment is made of the driving forces for change in the future.
• Identify predetermined factors. Assess which future developments are predetermined, that is, will take place in any scenario.
• Identify critical uncertainties. Identify the critical areas in which the future is uncertain and can easily flip-flop.
• Develop scenario plots. A scenario is defined by combining a small number of sets of critical uncertainties. A comprehensive description of how the future would look under this scenario then is developed. These futures must be plausible.
• Consult. A rigorous consultation process to clarify the scenarios involves presenting the scenarios to a large number of people who have expertise relevant to the scenario exercise, collecting their comments, and incorporating the comments in the framework and scenario stories. Consultation will reveal the gaps in knowledge of the system being studied. Part of the consultation phase is to decide on additional research in areas in which new or more knowledge will improve the quality of understanding.
• Assess the implications of the different scenarios. The best possible responses of the organization(s) concerned to each of the plausible future scenarios are assessed.
• Compare possible responses to the different scenarios. Two elements in the comparison require special attention (1) the actions that can be found in all responses and tend to be associated with low risk and (2) the responses that differ more among scenarios. Responses in these fields may require further assessment to understand how the impact of change on these variables can be managed. Differing responses also may lead to the development of correlated response policies.

Gyanesh K Shukla
Environment/Development Consultant India


Dear Participants and moderator of the FSN Forum,

Innovative finance, traditional finance and regressive finance:

1.       I got confusion about the term of innovative finance used on this
cycle of discussion.  From my understanding the innovative finance is a new
or creative approach which makes positive change in society and benefits
mostly to socially disadvantaged group. However, the discussion is mostly
oriented on traditional financial sources: remitances, community fund etc.
Based on my experience community people collect money from households
and various other community activities and use it in developing, improving, or
maintaining common resources such as irrigation canals. So does the
remittance for buying land, agricultural equipments and other inputs. Many
communities are practicing them from history. In some areas the practice
might have started recently. Is this an innovative finance or traditional
finance? Do place/ community and time matter to be a investment mechanism
as an innovative finance?

In Nepal a few community forest user groups have used some community
forestry income mostly generated from timber sale to help poor households
to invest in livestock. IFAD also provides similar type of support in
collaboration with government. The income from REDD programme, the payment
for environmental services of forestry is also considered new financing
systems for rural development. The programmes are destroying many community
systems which were sustainable and fair in society. International aid
agencies, professional elite and NGOs claimed in their reports that these
are innovative finance and worth of expanding in other communities. However
the households and particularly the poor ones, had got much more benefits
when they had easy access to non-timber products and services in
traditional forest management systems.  The benefit the households got from
previous regime was on kinds and the new regime provided the benefit in
cash form. The net benefit is negative in society and poor households have
suffered most. Can any financial development expert explain me whether
it is an innovative finance or regressive finance?  From my understanding
it is vested interest group constructed concept of innovative finance and
the reality is the other side.

I see similar problems on the innovative finance which is intended to
explore in this discussion forum. The people working in finance are smart
and put old wine into new bottle and sale to society as a new product.

2.       If anybody has innovative finance its target should be in the
neglected and high impact areas. This is generally the areas where the
funding from government and other common financing sources are not
institutionalized. The problems areas are not universal in characteristics
but specific to community and country.

Thanks for your reading time and interest.
Best Wishes.
Bhubaneswor Dhakal

Dr. Philipp Aerni FAO, Italy

Innovative financing for food security and environmental services Payments for Ecosystem Services (PES) have been proposed as one of a suite of tools to contribute to sustainable and productive agricultural practices as well as the restoration and rehabilitation of damaged ecosystems (see . In developed countries such as Switzerland eco-payment schemes for farmers have greatly contributed to the environmental, cultural and social dimension of sustainable agriculture, especially in mountain regions. The question is whether this approach can also be effective for developing countries that aim to reconcile the objective of national food security with sustainable agricultural practices. Bertrand Vincent is right to point out that there may be some difficulties in transferring environmental policy instruments from developed to developing countries, especially in view of the fact that developing countries do often not have the means available to ensure the successful implementation of PES projects. Funding for such projects in developing countries therefore mostly comes from affluent countries and, with it, also the political priorities of foreign stakeholders. In this context, it is not just the private sector, as Mr. Vincent assumes, that is driven by motives of self-interest, but also development organizations and government agencies in developed countries that tend to focus on the priorities of donors and taxpayers back home rather than those of the small-scale farmers and their local environment in the respective developing country that is supposed to benefit from its project funding. This explains why such projects often lack financial sustainability; they tend to be abandoned by the local stakeholders once the funding stops. Mr. Vincent further portrays agriculture as a sort of ‘loser’-business that needs government assistance to prevent it from becoming unsustainable. Many examples show however that farming can bridge the environmental-development divide in developing countries, if farmers have a chance to get integrated into the global knowledge economy and are embedded into a local institutional environment that encourages sustainable change. PES can be part of such an institutional environment. It can achieve financial sustainability if it leads to the creation of new markets for environmental goods. A market for environmental goods/services can emerge if innovative and entrepreneurial local actors find ways to provide farmers with cost-effective environmental solutions that allow them preserve the local ecosystem services while enhancing agricultural productivity. Small-scale farmers that would have difficulties to pay for such services or are unable to do the knowledge and labor-intensive work themselves could be supported by means of a voucher scheme that would also allow them to choose among different providers of such services. Such a scheme is likely to become financially sustainable because the private interests of the local actors are better aligned with the public interest to promote development and protect the environment. The creation of a new market for environmental services would then also attract more private sector funding and allow for the upscaling and continuous improvement of these services. It would be a bottom-up business that also contributes to local empowerment and therefore address the social and cultural dimension of sustainability. Unlike in developed economies where the government has sufficient funding available to implement PES without a great involvement of the private sector, the effective and sustainable introduction of PES in developing countries may have to count on public-private partnerships. The sustainable rural development program in micro-sheds of the government of the State of Rio de Janeiro in Brazil appears to be very successful in mobilizing financial support not just from the federal state and from the involved municipalities but also local NGOs and the private sector in its PES scheme applied to watershed management. It is a participatory design that proved to be able to reconcile community needs with government goals by creating not just solutions for the environment but also economic opportunities.