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22/11/2007

Financing for Agriculture meeting stresses need for increased funding for the sector

On 20 November, as part of the FAO Conference, the Investment Centre organized a “High Level Special Event on the Financing of Agriculture: Issues, Constraints and Perspectives”. Participants included over 200 delegates, of which a number made interventions emphasising the urgent need to secure increased funding from domestic and external sources for the agriculture sector, particularly in order to achieve the Millennium Development Goal 1 of halving hunger by 2015.

FAO’s Director-General, Mr Jacques Diouf, delivered the welcoming address. He pointed out the lamentable decline in financing for agriculture over the last decade, even though overall Official Development Assistance had increased substantially, and recalled that insufficient investment in agriculture is one of the main constraints to increasing agricultural production. He noted the decline in allocations to agriculture by the main international financing institutions, and pointed out that although Foreign Direct Investment to developing countries had increased enormously over the last 20 years, the share to agriculture was less than 1 percent. Mr Diouf also highlighted that farmers themselves are the largest investors in the sector, with US$18.6 billion invested in 2003.

Important points raised by the three keynote speakers included:

Mr Rupiah Banda, Vice-President of Zambia, stressed the importance of investing in agriculture in Africa, and referred to private sector initiatives and opportunities for public-private partnerships in the agriculture sector.

Mr Jerzy Plewa, Deputy Director-General for Agriculture and Rural Development of the European Commission, noted that agriculture will receive greater attention under the 10th European Development Fund, with some €3 billion for the sector, focusing on Africa. Improving aid effectiveness and donor coordination through mechanisms such as the Global Donor Platform for Rural Development was at the forefront of the European Union’s political agenda.

Mr Akinwumi Adesina, Vice President of the Alliance for a Green Revolution in Africa, called for innovative financing mechanisms to be found, especially for Africa, and pointed to the renewed political commitment to revitalizing agriculture in Africa, reflected in the Maputo Declaration and support for NEPAD-CAADP. Greater awareness of the impact of rapid intensification on the environment was also needed.

The meeting recognized the significant role of Ministers of Finance in allocating resources for public investment in the sector. The utilization of savings from debt relief measures have been allocated predominantly to the social sectors rather than to agriculture.

Several delegates raised the issue of use of subsidies to boost agricultural production, and pointed to the positive impact that subsidies could have on the agriculture sector, as noted in many developed countries.

Reference was also made to the importance of ensuring that the cost of financing to farmers themselves is reduced and to enhance accessibility and reliability of loans

The Event was chaired by Mr Einar Guofinnsson, Minister for Agriculture and Fisheries of Iceland.