FAO.org

Persistent underinvestment in agriculture in developing countries can be attributed to many issues including: climate risks, fragmented input and service markets, seasonal and long-term financing requirements, weak property rights, and market-distorting political interventions. However, the rapid rise in world demand for agricultural products provides incentives for local actors to develop innovative financial and risk management mechanisms. Commercial investors are starting to recognize agribusiness as a promising sector because of the upwards trend in food markets. As most commercial investors focus solely on financial returns, public incentives and support are required to make investments more inclusive and to create business linkages between local farmers and small and medium enterprises (SMEs).