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There is widespread agreementthat the private sector should
playa greater role in ood security,moving markets in ways thathelp
the worlds most vulnerable
groups. It can, and should, happen. But it has
not happened yet at least not withthe necessary scope and or on
the necessaryscale. Not in a world that must produce70 per cent
more ood to eed the two billionmore people it will have by 2050.
Meetingthis goal will require an estimated $83 billionper annum in
new investment. Most o thiswill have to come rom the private
sector, andwe are not there yet.
The G8 Camp David Summitsannouncement in May 2012o the New
Alliance or FoodSecurity and Nutrition, includinga commitment to
mobilise newprivate capital, was especiallywelcome. It is a
promisinginitiative, but it is still very muchin the early
stages.
Much good work is alreadybeing done in many quartersto stimulate
this process. Thebusiness community, bilateral donors,private
oundations, international fnanceinstitutions, civil society,
researchorganisations and others are all makingimportant
contributions. But a great deal hasoccurred in individual pilot
projects. Theissue must instead be addressed holisticallyi a ood
crisis is to be averted.
Reframing food security issuesAchieving this transormation will
not beeasy. It will take sound government policiesthat attract
signifcant levels o privateinvestment. To get there, one central
point
Financing food security:
the role of the private sector
The private sector will key in helping to achieve
world food security, but concerted international
effort, with leadership from the heads of the G20countries, will
be necessary to coordinate policies
ByLars H Thunell, executive vice president and CEO,
International Finance Corporation, World Bank Group
needs to be remembered: armers are businesspeople, too. Reraming
the ood securitydebate along these lines is one o todaysgreat
challenges o development acingthe international community. As the
G20leaders gather in Los Cabos or their annual
international policy coordination talks, goodmodels o a private
sectorbased agriculturaltransormation must not be let behind.
Consider just one case: Nigeria. In the1960s its share o global
exports was morethan 60 per cent in palm oil, 30 per cent inpeanuts
and 15 per cent in cocoa. Yettoday its share in these markets has
allen
to fve per cent or less. Aricas most populouscountry is now a
net importer o agriculturalproducts, spending more than $4.2
billion inhard currency reserves each year to importwheat, fsh,
rice, sugar and other essentials toeed its nearly 160 million
people.
Clearly a new, private sectorbasedapproach must be taken in
Nigeria and otherdeveloping countries with great potential or
increased production o ood crops.A good overarching ramework or
suchan approach, including vital questions oland use, now exists in
the Principles orResponsible Agro-Investment launched bythe World
Bank and key United Nations
agencies in 2009, drawing support rom theollowing years G8
Muskoka Declaration.IFC, a member o the World Bank Group, ispleased
to partner with the G20 on a globalinitiative to build the private
sectors role in
ood security in the worlds poorest countries:the Global
Agriculture and Food SecurityProgram (GAFSP).
Future directionsA multilateral mechanism to help
implementpledges rom the G20 summit in Pittsburgh inSeptember 2009,
GAFSPs largest componentis a public sector window managed by
the
World Bank that has tota l unding o $697million pledged by seven
donors to date.
Complementing these eorts on thegovernment side is GAFSPs
private-sectorwindow managed by IFC. Designed toprovide long- and
short-term loans, creditguarantees, and equity to support
private-sector activities or agricultural developmentand ood
security, it now has approximately$200 million in unding, with a
recent largeDutch contribution supporting existing grantsrom Canada
and the United States.
IFC announced the frst transaction underthe private-sector
window o the programme
on 4 April 2012. Together,IFC and GAFSP provided a$15 million
loan to expandproduction at PRAN, a ood-processing company based
inBangladesh. This project willhelp ulfll continued growthin
domestic demand as well asincreased export market demandin India,
Arica and theMiddle East or packagedood products. It will soon
be
ollowed by many more.More large-scale eorts o this kind must
ollow to tap into the private sectors capital,technology and
management expertise inways that help the poor and hungry. Theocus
must be on improving inrastructureand logistics, on increasing
access tofnance and on raising armers productivity,education and
incomes.
Farmers produce enough to eed everyoneon Earth today. But poor
storage, distributionand other actors leave a billion peoplehungry.
Let unattended, this tragic situationwill only become worse in the
coming years.So innovative approaches are needed to
Farmers produce enough to feed everyone on
Earth. But poor storage, distribution and
other factors leave a billion people hungry.
Left unattended, this tragic situation willonly become worse in
the coming years
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mitigate risks that have so ar kept many othe worlds major
logistics companies romentering markets where they are neededmost.
Attracting them into new public-private partnerships would allow
them to cut
todays excessive rates o wasted ood bybuilding new silos, cold
storage acilities,warehouses and ports.
Meanwhile, new risk-sharing acilitiesand other measures should
be developedto help small-scale armers start to attractmore
fnancing rom the local banksthat rarely do business with them
now.This would allow them to invest in newseed, ertilisers,
machinery and other keyneeds to increase production.
This could include work with a majorglobal reinsurance company
on a large-scaleund to help local armers better manage theirbiggest
risk weather.
It also could include a signifcant portolio-based bank r
isk-sharing acility with a donor-unded frst loss acility. There are
many goodideas to be considered in the context o a newglobal
commitment or private-sector action tofnance improved ood secur
ity.
Given todays serious constraints on landand water resources, a
ocus on increasedproductivity, education and incomes must
beembedded in all these eorts. IFCs experienceshows that one o the
best approaches hereis to bring more small-scale armers into
thesupply chain o demanding, sustainability-driven global ood
companies.
These buyers high standards drive theproducers to increase their
productivity,especially in export crops such as coeeand cocoa. But
this same approach can andshould be taken as well with the
domestic-market staples on which the most poor andvulnerable people
depend.
An urgent needIFC is the worlds largest global developmentfnance
institution ocused on the privatesector. In the past our years, the
WorldBank Group has increased its annualagriculture investment rom
approximately$4 billion to $8 billion, nearly hal o which
now comes rom IFC.IFC welcomes the G20s current emphasison ood
security issues. We are pleased to bepart o the response one we
hope will onlygrow stronger in the uture. The worlds poordeserve
nothing less.
In India and other developing countries, theprivate sector plays
a key role in increasing
ood supply or poor and vulnerable people
PhotoCredit:BradRo
berts/IFC
