Agricultural investment needs to improve in quality to drive high-quality agricultural development
Because of the food crises that have recently appeared in some countries, as well as growing concerns about global climate change, agriculture has become an area of key concern for the international community. Eliminating hunger and achieving sustainable agricultural development require a substantial increase in agricultural investment, but more importantly, they require improving the quality of investment.
Governments and donors play a key role in promoting, guiding and governing agricultural investment, but private investors, mainly farmers themselves, must be at the core of all agricultural investment strategies. Investors in agriculture can be divided into public or private investors, and foreign or domestic investors. Among domestic private investors, most are farmers, and they are currently the largest source of agricultural investment in low- and middle-income countries. Domestic public investors are mainly national governments, and they are the second-largest source of agricultural investment, followed in order by foreign public investors such as development partners, and foreign private investors such as companies.
Farmers invest in order to support their families, increase and diversify their incomes, and accumulate wealth. For farmers, investing in agriculture means making some sacrifices now (such as money, energy or time) in order to accumulate assets or capital that can raise productivity and income levels in the future. Buying a plow, building irrigation channels, learning new skills, or cultivating trees and raising animals until they reach their reproductive stage are all ways of investing aimed at raising farmers' productivity or income levels. Only when the expected returns can offset the potential risks and exceed alternative investment methods. Agricultural investment is crucial for reducing hunger and promoting sustainable agricultural production. In today's world, places where agricultural capital per agricultural worker and public investment in agriculture have stagnated are precisely the centers of today's poverty and hunger problems. Growing demand in the coming decades will put increasing pressure on the natural resource base. Eliminating hunger in a sustainable way requires not only a substantial increase in investment in agriculture, but also improved effectiveness of that investment. Farmers are the largest group of investors in agriculture in developing countries, and any strategy aimed at increasing agricultural investment must put farmers at its core.
The challenges faced by private and public investors in agriculture vary across different contexts. Regional and national characteristics have a certain influence, and so do the characteristics of each investor. However, all agricultural producers, regardless of their scale or national circumstances, need an enabling environment with basic features: infrastructure and human resource development, trade and market institutions, macroeconomic stability and good governance. Agricultural investment depends especially on key enabling factors, such as policy predictability and transparency, clear land use rights and property ownership, transparent trade policies and sound rural infrastructure (including transport, irrigation, communications, water and sanitation facilities and electricity). Other agriculture-related enabling factors include production practices and standards, research and development, and rural financial services.
The growing trend of large-scale corporate investment in agriculture brings new opportunities and challenges to agriculture. Governments, donors, civil society and the private sector (especially farmers) must rebuild partnerships to ensure that more investment goes to agriculture and is used to produce socially beneficial and environmentally sustainable outcomes, so that investing in agriculture creates a better future.