FAO urges governments to create favorable investment climate for farmers

The Food and Agriculture Organisation (FAO) says making more and better investments in agriculture is one of the most effective ways to reduce hunger and poverty while safeguarding the environment.

This is the key message of FAO´s flagship annual report; “the State of Food and Agriculture 2012 (SOFA)” presented in Rome, which was made available in a press release copied to the Ghana News Agency (GNA) on Friday.

“The world´s more than one billion farmers must be central to any agricultural investment strategy, as they are the biggest investors in this sector. But farmers’ investments are often limited by unfavourable investment climate.

“A new investment strategy is needed that puts agricultural producers at (the) centre, the challenge is to focus the investments in areas where they can make a difference. This is important to guarantee that investments will result in high economic and social returns and environmental sustainability,” the release quoted the FAO Director-General José Graziano da Silva as saying.

It said a new data showed that farmers in low- and middle-income countries invest more than $170 billion a year in their farms – about $150 per farmer.

It said this was three times as much as all other sources of investment combined, four times more than contributions by the public sector, and 50 times more than official development assistance to these countries.

“Investing in agriculture is clearly paying off, according to the FAO report. Over the last 20 years, for example, the countries with the highest rate of on-farm investment have made the most progress in halving hunger, to meet the first Millennium Development Goal,” the release stated.

It said in regions where hunger and extreme poverty are most widespread – South Asia and sub-Saharan Africa – have seen stagnant or declining rates of agricultural investment over three decades.

According to the report said recent evidence shows signs of improvement, but eradicating hunger in these and other regions, and achieving sustainably, would require substantial increases in the level of farm investment in agriculture and dramatic improvements in both the level and quality of government investment in the sector.

It said the report emphasised that in many low- and middle-income countries, farmers are often confronted with weak incentives to invest.

“A number of factors can drastically reduce the incentive to invest, including poor governance; absence of rule of law; high levels of corruption; insecure property rights; arbitrary trade practices; high taxation of agriculture relative to other sectors; and inadequate levels and quality of rural infrastructure and public services.”

It said smallholders face specific and severe constraints, often including extreme poverty, weak property rights, and poor access to markets and financial services.

Overcoming these barriers would be essential to unlock the full investment potential of farmers in many rural areas.

The report recommended the focusing on a number of areas in order to foster smallholder investment, which include governments and their development partners helping smallholders mobilise their savings and gain improved access to credit.

“Stronger producer organisations, such as cooperatives, can help smallholders deal with risks and provide better market access and social protection can contribute to the expansion of the asset base by the poorest smallholders,” the release added.

It said national governments are the second largest source of investment in agriculture.

The report urged governments and donors to channel their limited public funds into areas that have been proven to be strongly supportive of agricultural growth and poverty reduction, such as agricultural research and development, rural infrastructure and education.

It said evidence from many countries shows that investing in these areas often has much higher returns than spending on subsidies for agricultural inputs such as fertiliser, while such subsidies may be politically popular, they usually do not offer the highest returns.

The report called upon governments, international organisations, civil society and corporate investors to ensure that large-scale investments in agriculture, like the acquisition of land by private companies and funds in a transparent, accountable, socially beneficial and environmentally sustainable.

“The key word is good governance. We need to assure that the investments meet a certain set of conditions that assure that they contribute to food security and sustainable local development,” for Graziano da Silva.

“Instruments like the new Voluntary Guidelines for the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security, endorsed by the Committee on World Food Security (CFS), offer governments and communities support in negotiating contracts that are beneficial while respecting the rights, livelihoods and resources of the most vulnerable,” the report said.

It reiterated that the CFS is also beginning a process to develop and ensure broad ownership of principles for responsible agricultural investment.

It noted that these interventions are expected to promote investments in agriculture that contribute to food security and nutrition, and to support the progressive realisation of the right to adequate food in the context of national food security.

Source: GNA

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