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Investment in agriculture

New trees being planted in a project field for reforestation - © FAO/Vasily Maksimov

Investing in agriculture is one of the most effective ways to reduce hunger and poverty, particularly in rural areas. Many countries that have consistently invested in agriculture are on track to achieve the first Millenium Development Goal of reducing by half the proportion of hungry people. FAO works in partnership with governments and private sector, with national and international organizations and with financial institutions to increase the volume and effectiveness of investments in agriculture and rural development.

FAO's role in investment in agriculture 

Agricultural investment is one of the most important and effective strategies for economic growth and poverty reduction in rural areas where the majority of the world’s poor live.

Gross domestic product (GDP) growth in agriculture has been shown to be at least twice as effective in reducing poverty as growth originating in other sectors (World Bank, World Development Report 2008. Agriculture for development).

The regions of the world where hunger and poverty are most widespread today have seen stagnant or declining rates of agricultural investment in agriculture over the past three decades.

Eradicating hunger in these regions and increasing food production requires substantial increases in the level of investment in agriculture, including dramatic improvements in the level and quality of government’s own investment in the sector.

Rural development

FAO estimates that an additional investment of USD 83 billion will be needed annually to close the gap between what low– and middle income countries have invested each year over the last decade and what is needed by 2050.

In other words, yearly investment in agriculture needs to rise by more than 50 percent.

FAO’s activities to encourage investment in agriculture and rural development include:

  • technical and economic advice to governments on policies and legislation that influence public and private investment
  • capacity development of governments to design and execute multi-sector and multi-partner investment strategies aligned with their own priorities
  • assistance for countries to design, implement and evaluate investments, not only for agriculture and rural development, but also to meet the food and nutrition needs of their citizens
  • technical support to partner International Financing Institutions to leverage additional investment 
  • support to the development and implementation of the countries’ agricultural, food security and nutrition investment strategies and plans under the Comprehensive Africa Agriculture Development Programme (CAADP) of the New Partnership for Africa’s Development (NEPAD)
  • Analysis of trends and impacts of foreign agricultural investment in developing countries
  • Support to international consultations to develop principles for responsible agricultural investment

The Inter-Agency Working Group (IAWG) composed of FAO, UNCTAD, IFAD and the World Bank have jointly developed the Principles for Responsible Agricultural Investment that Respect Rights, Livelihoods and Resources (PRAI).

These draw attention to rights and livelihoods of rural populations and the need of socially and environmentally sustainable agricultural investments.

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