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Agriculture: Improving Supply and Demand Through Sustainable Investments

Find out how sustainable investments can be a benefit to the agricultural supply chain and the farmers that support it.
sustainable agriculture investments

Agriculture is the bedrock of our food system, providing jobs and contributing to economic growth while supplying us with healthy food. The need for investment in sustainable agriculture has never been more urgent.

While many countries are investing in the long-term sustainability of food systems, we see falling volumes of investment across most sectors, except for biotech and IT. Taking action now to build a sustainable future for agriculture will strengthen the sector and deliver significant economic benefits for society.

Sustainable investments strengthen the long-term health and resilience of the agricultural system while also enhancing its productivity. Key measures for increasing investment in sustainable agriculture will be to work with food companies to improve their risk management strategies and build more transparency in their supply chains. At the same time, we need to promote more liquidity to drive investment into farmers’ hands as quickly as possible.

Investing in sustainable agriculture and food systems will improve supply and demand and reduce poverty through better resilience against climate change impacts such as drought and floods.

In the face of unprecedented challenges, this action plan aims to support governments in taking concrete steps to address the root causes of underinvestment in sustainable agriculture and food systems as well as set a vision for sustained investment into our future food production.

Sustainable Adaptation to Climate Change

Agricultural production will be key for feeding a growing global population, bettering livelihoods, providing income and training for farmers. Climate change will increase rather than reduce pressures on agriculture, especially in the tropics, and a lack of resilience in agriculture will lead to substantial losses.

Sustainable and Resilient Food Systems

These are indispensable to enable higher levels of agricultural productivity, particularly in regions where agriculture is highly land-intensive, such as sub-Saharan Africa. It is here that smallholder farmers will be most vulnerable to climate change.

Food systems must be sustainable and resilient to reduce the potential for insecurity and conflict, especially in urban areas, where people’s access to food is dependent on global supply chains.

Sustainable Food Systems

Sustainable food systems can help ensure food is produced, processed, distributed, and consumed equitably and sustainably. This will provide a key driver for economic growth, creating new employment and investment opportunities in a range of sectors, from agriculture, food and beverage processing, logistics, retail, finance, transport, energy, and urban design.

How to Improve Supply and Demand Through Sustainable Investments

Private companies are contributing to the decline in investment in agriculture, with some reporting an increase in risk aversion, while government policies and public spending have not kept pace with the scale of the challenge. This action plan will seek to encourage viable and high-performing supply chains for sustainable investment.

Strengthening Supply and Demand Through Investment in Sustainable Agriculture

The sector needs a wide range of measures to build the resilience of its systems. This includes support for smallholder farmers, who produce 70% of the world’s food, with better access to markets, credit and technologies that promote productivity and resilience. Strategies should also focus on supporting climate-smart agriculture, which from a developmental perspective is not new but is only now starting to achieve greater policy recognition.

Improving the Investment Climate for Sustainable Agriculture and Food Systems

The overall investment climate is critical to the development of sustainable supply chains because it can be an important driver for the flow of private capital.

Too many barriers impede investment in sustainable agriculture and food systems that can be addressed through policy measures. This includes addressing perceptions of risk, improving legal frameworks, improving governance, and increasing transparency in supply chains, while also promoting the attractiveness of investments in different sectors.

Strengthening the Supply and Demand Cycle Through the Development of the Market

Increased investment may be achieved through stronger supply and demand, including through increasing flows of private capital. The market is an important driver for sustainable investments, which can be promoted through enhancing market transparency, bringing researchers together to create best-practice standards for food companies, and supporting more sustainable value chains. Stock exchanges play an important role in connecting companies to investors as well as providing mechanisms for liquidity and transparency that can underpin sustainable supply chains.

The Imperative for Action

There are huge opportunities in sustainable agriculture and food systems, but major challenges are also. The private sector, which accounts for around 80% of investment in agricultural supply chains, is making the majority of investment decisions in commodity markets. This has led to lower levels of investment in sustainable agriculture and food systems, which is important to help reduce the potential impacts of climate change on food security.

Conclusion

To create a resilient world food system, we need to invest more in sustainable agriculture and food systems. This investment will enable developing countries, which are emerging from a period of structural adjustment and growth constraints, to break out of poverty traps. This action plan is based on the premise that we can achieve this through strong private sector engagement in supply chains. Therefore, sustainable investments are critical for achieving change.

March 31, 2022

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