Capital and Investment In many instances, the gaps between high-income and lowincome countries are widening as a result of low investment rates and/or growing labour forces. This is particularly true in countries with low levels of agricultural capital stock (ACS) per worker.
CHART 18: Credit to agriculture, share of value added in agriculture, selected countries (2005 and 2010)
2005
Vulnerable and food-insecure people are likely to channel their savings into assets that reduce their vulnerability to shocks rather than investments that increase resource productivity. In this context, credit to agriculture, including investment-oriented loans provided by the banking sector, relates directly to the rate at which ACS is being accumulated.
Yemen
United Arab Emirates
Although most investments are mobilized by the farmers themselves, expenditures by general government units and public (financial and non-financial) corporations can create a conducive environment – economic incentives – and ensure sufficient availability of public goods such as basic rural infrastructure and market openness. The efficiency of public expenditure for agriculture is therefore a key element of the overall policy mix and will require a reversal of the declining trend observed over the last 20 years. Until low-income, food-deficit countries (LIFDCs) are able to increase their incomes to levels at which they can generate sufficient savings to meet their investment needs, they will rely on external resources (transfers and some measure of official finance) to generate funds for agricultural development. Official development assistance (ODA) is an important complement to domestic resources and, over time, there can be dramatic changes in the composition – and impact – of these resources.
Oman
Kuwait
Jordan
0
10
20
30
40
percent
Source: FAO, Statistics Division.
CHART 19: ODA received in agriculture, forestry and fishing sectors, share of total ODA (2001 and 2010)
Owing to the imperfect information available to potential investors, and the perceived high risks of longer-term investment, the allocation of foreign direct investment (FDI) to agriculture, including to the manufacture of food and beverages, has tended to bypass most LIFDCs, where generating additional food supplies and the incomes necessary for access to food remains a critical challenge.
Agriculture
Forestry
Fishing
8
6 percent
FAO is collaborating with the International Fund for Agricultural Development (IFAD), the International Food Policy Research Institute (IFPRI), the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), the United Nations Conference on Trade and Development (UNCTAD) and the World Bank Group to strengthen the monitoring of these resource flows. The Principles for Responsible Agricultural Investment that Respects Rights, Livelihoods and Resources informs this initiative to establish an integrated investment data set.
2010
4
2
Further reading (www.fao.org/wsfs/forum2050/)
• FAO Foreign Investment in Agriculture (www.fao.org/ economic/est/investments/)
• Principles for Responsible Agricultural Investment that Re-
0 Af ric a (2 00 Af 1) ric Am a (2 0 er 10 ic ) a Am s (2 0 er 01 ic ) as (2 01 As 0) ia (2 00 As 1) ia ( 20 Eu 10 ro ) pe ( 2 Eu 00 ro 1) pe (2 Oc 01 ea 0) ni a ( Oc 20 ea 01 ni ) a (2 01 0)
• FAO How to Feed the World in 2050: Investment Brief
spects Rights, Livelihoods and Resources (www.unctad.org/ en/Pages/Home.aspx)
• Foreign Agriculture Investment Database (www.fao.org/ tc/policy-support/investment-policy/fdi/en/)
18
Sources: OECD and FAO, Statistics Division.