FSN Friends --
We are asked to suggest innovative financing mechanisms (IFMs) “as a means to complement the lack of investment in agriculture and decreasing ODA [Official Development Assistance], with the aim to provide reliable and predictable financing for development in the area of agriculture, food security and nutrition.”
Before pushing ahead to answers, perhaps we should pause to parse the question. The core concern here seems to be some sort of deficit. What is the main motivator here? Is it the problem of hunger in the world today? Is it concern about overall food supplies at some time in the future? Is it lagging profitability in particular industries?
What type of IFMs are we talking about? Large-scale? Small-scale? In low-income countries, high-income countries, or everywhere? Maybe the concern is that certain groups have less access to credit than others?
There are big differences between investments for agriculture and for basic nutrition. Much of agriculture is not for food, and much of the food production is for luxury foods such as coffee and chocolate. Much of the food that is produced goes to people who are not particularly needy.
What evidence do we have that there is a lack of investment in agriculture? What are the key indicators? Some might argue that agriculture, viewed as a business, generally does get the amount of investment it should be getting. That is, maybe agriculture is already getting the investments that would be expected given the prevailing risks and rates of return.
So what exactly is the problem to be addressed here?
Once we have decided what is the main problem we want to look at, we should spend some time explaining it. Why is there not enough investment in agriculture, or the particular type of agriculture that interests us?
We should think about whether finding IFMs is likely to be a good way to address the problem that interests us. Maybe there are other good approaches. Maybe the focus on IFMs is too locked in to the conventional market perspective, and thus too narrow in its vision.
Suppose we agree that the main problem we want to focus on is the widespread hunger in the world. This is not due to an overall global food shortage. It is due primarily to the fact that many poor people do not have enough money to access the food supply that is out there, and they do not have adequate resources to produce their own food. New investments in conventional agriculture are not likely to help them very much. However, well-designed investments in the poor could be very helpful.
Maybe thinking of hunger as a global economic problem takes us down the wrong track. Suppose we look at the hunger issue at the level of families and small communities. With decent opportunities, and freed of exploitation by others, every family and every community would find ways to provide for itself. With decent opportunities, they would produce their own food, or they would earn enough money to purchase their food. If that is so, then the investment that is needed would be to ensure that every family had those opportunities.
Do the powerful people of the world care enough about poor people’s well-being to ensure that they have those opportunities? Or are they indifferent? Or maybe those who are better off are actively opposed to improving the lot of the poor because they value the cheap labor and cheap goods that the poor provide?
There are abundant resources in the world that could be directed to ensuring decent opportunities for the poor, but those who control those resources obviously have other priorities. New sources of funding could be proposed, but is there any reason to expect that those who control those funds would prioritize the poor? Yes, one could imagine innovations such as a small tax on currency transactions, but how would those revenues be managed? Would the powerful accept such a tax if the revenues were used primarily for the benefit of the poor?
“Investing” in the poor is not going to provide secure economic returns on investments comparable with other more conventional investment opportunities. Whether they use old or new sources of funds, we would have to find investors who would view the relief of human misery as a good return on their efforts.
Aloha, George
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Professor George Kent (Emeritus)
Department of Political Science
University of Hawai'i
Honolulu, Hawai'i 96822
USA
Prof. George Kent