What characterizes international discourse and action on investment in agriculture today?
A presentation by Nora McKeon
- There is a general recognition of the need to increase investment in agriculture, in order to: promote formation of productive capital in agriculture; strengthen domestic food production in food deficit countries; address risk and resilience issues (climate change, price volatility, etc.).
- All parties invoked objective of attaining food security but very different strategies were proposed. Most (but not all) recognize need to support small producers as key actors in achieving food security. Some, but not all, link food security to poverty reduction. Others place accent on increased productivity. Broad range of strategies: from those most coherently “friendly” to sustainable family farming (e.g. Special Rapporteur on the Right to Food, International Assessment of Agricultural Knowledge, Science and Technology for Development, European Commission policy framework to assist developing countries in addressing food security challenges, UNCTAD and UNEP on agroecology and climate change) to others that are ambiguous/confused or even inimical (High Level Task Force's Comprehensive Framework for Action, G8 L’Aquila Declaration, Global Agriculture and Food Security Program, US Feed the Future, UK Global Food and Farming Futures, Gates/AGRA, World Economic Forum New Vision for Agriculture).
- Rhetoric not matched by action:
Pledges have not been followed by commitments/disbursements. L’Aquila G8 pledges = $22 billion for 2009-2011 of which only $6.7 billion additional.
By L'Aquila Food Security Initiative (AFSI) meeting in Paris last month: disbursements = only $4.2 billion.
Programmes that have been funded have not changed significantly to better target food security and small producers (i.e Global Agriculture and Food Security Program - World Bank). The World Bank positioned to take responsibility for climate finance.
- Discussion about which models of agriculture most suited to promoting Food Security tends to be swept under the carpet at the moment, but in fact the differences in proposed strategies boil down to a question of industrialized agriculture (based on liberalized markets, (bio)technology/agrochemical-based production, external input-intensive, private sector-driven) VS sustainable, ecological small holder, family farming producing for local, national, regional markets (in framework of food sovereignty). Adhesion of many African governments to vision of modernisation of agriculture driven by markets and high technology is a major problem.
- Reformed Committee on World Food Security (CFS) provides potential opportunity to bring food security concerns to bear on strategies for investment in agriculture, but there is strong resistance from most G8 governments, the World Bank, corporations. And African presence extremely weak.
New sources of investment – beyond Official Development Assistance (ODA) and in-country government expenditure – have come on the scene strongly, targeting different objectives than those of food security, poverty reduction, development..
- At the same time, new forms of private and private/public investment have appeared, driven by a combination of interests ranging from political interests (desire of rich food deficit countries to outsource food production) to commercial (biofuels…), to financial speculation (hedging by investment funds). Resulting in: the commodification of African land and water resources directly and no longer simply the commodification of African products for export as in the past; landgrabs. Competition for growing African urban food markets (one of few growing food markets in the world) is also on the horizon.
- How are African governments reacting to these new investment flows? Competing to obtain them by offering cheap and easy access to resources, e.g. landgrabs. Aided by permissive investment regulations promoted under Bilateral Investment Treaties and policy advice of International Finance Corporation (IFC, World Bank group). And unaccountable governance/corruption is also an issue. Collusion among Foreign Direct Investment (FDI), national authorities and national capital is insufficiently documented. Collusion also between corporate interests and development partners. USAID as front runner for corporations re. biotech and permissive bio-safety regulations (in Mali and Uganda USAID leads efforts to introduce biotech, with WB and Gates also funding). Policy incoherence of other development partners – e.g. European Union.
- Cover discourse for welcoming FDI is that of “enough of this ODA which hasn’t solved the problem! We need to be business-like”. Instruments like Responsible Agricultural Investment (RAI) principles invoked to make it all seem politically correct.
Confusion about what we mean by “investment” and who invests in what
- Distinction between international and domestic sources of investment intersects with distinctions between public (ODA and national) and private (FDI and national – the latter broken down again into investment by off-farm actors and on-farm investment by farmers themselves). Private/public Sector is a confusing category; kaleidoscope of sources and types of investment.
- Confusion is compounded by multiplication of public-private partnerships and by the increasing tendency of ODA to channel investment to/through private sector actors (GAFSP Private Sector Window, managed by IFC).
- Experts admit that there is not even an accepted definition of “investment”. The 2012 State of Food and Agriculture (SOFA) definition “expenditure that generates a future stream of income” includes human capital, not just infrastructure. Can input subsidies be termed investment? (in Malawi 13% public expenditure is for input subsidies; 12% for education). Statistical evidence about investment in agriculture is very weak.
- On the positive side: an increasing recognition that role of FDI and ODA is marginal. What counts is in-country government investment and above all investment by smallholders themselves – vast majority of investments in agriculture. In 2007: total of $189 billion investment in agriculture of which $139 billion domestic (public and on-farm). Only $3 billion FDI. So, what matters is policy and regulatory environment plus public investments in key public goods to enhance smallholder investment.
- But just what are these enhancing policies? SOFA working hypothesis = the same incentives work for everyone. The problem of smallholders is that they have more constraints. So the issue is to remove smallholder constraints rather than to design specific incentives and design “business models” that can be advantageous to smallholders. SOFA seeking to separate out investment from the issue of agricultural models. Is this possible or desirable? And where should the decisions be made and by whom?
- Aid effectiveness agenda and Rome principles are being used by development partners and investors to bring decision-making on policies and programmes to national level – where donor conditionalities have most weight - while ignoring issues of weak and/or corrupt governance and non-respect of stakeholder involvement. National decision-making fine (food sovereignty) but by whom and how? Donor conditionality not only on specific programmes but on entire policy-making process. AGRA “Policy Action Programme”: “progressive national agricultural policies for improved national food security and farmers’ productivity and incomes through accelerated and sustained adoption of agricultural technologies with strong technical and advocacy support from AGRA staff”.
- In Africa, CAADP used as “short hand” for “country-owned”, yet it is evident that the whole race towards investments is accelerating the CAADP compact and Country Investment Plan process to such a degree that stakeholders participation becomes increasingly difficult. Feedback from the African Famers Organizations (FO) participants on how the CAADP is operating in their countries/sub-regions will be vital.
- Bring debate back squarely to models of agriculture as related to food security/resilience/environmental/employment etc. goals (food sovereignty) and to the importance of smallholder on-farm investment as compared with other forms/sources of investment.
- Go beyond defense of family farming “tout court” to demonstrate that it can feed the cities at competitive prices, provide quality products, be reliable in delivering, and that it can do so better than large-scale industrial agriculture CNCR/FONGS research is a good start, rice commodity chain in Senegal an example…..
- Clarify strategic ideas about what kind of policy environment and support is required for farmers themselves to be able to invest more effectively in the direction of achieving the goal of feeding Africa’s cities (e.g. subsidizing long-term investments-financial services, creating necessary infrastructure geared to domestic markets, market stabilization policies…) What kind of insertion of smallholders into value chains and on what terms? What “business models”?
- Clarify strategic ideas about scenarios for the “modernization” of smallholder agriculture.( C.f. De Schutter). Three scenarios: transition to agro-industrial model, coexistence of agro-industrial and family farming (SAGCOT), agricultural investment channeled decisively if not exclusively into support of sustainable and agro-ecological small-scale farming.
- Think more rigorously about what agro-ecological approaches to agricultural production family farmers need to adopt in order to be able to merit the claim of being part of the solution to climate change.
