Sunday, October 11, 2009

Feeding the world in 2050 requires $83bn a year

October 9, 2009

By Svetlana Kovalyova Milan

The world needed to invest $83 billion (R618bn) a year in agriculture in developing countries to feed 9.1 billion people in 2050, the UN's Food and Agriculture Organisation (FAO) said yesterday.

World agriculture needed massive investments to raise overall output by 70 percent over the next 41 years, including almost doubing output in developing countries to feed a projected extra 2.3 billion people by 2050, the FAO said.

Primary agriculture investment needs included about $20bn a year earmarked for crop production and $13bn for livestock, the FAO said in a paper ahead of a forum on how to feed the world in 2050, to be held on Monday and Tuesday in Rome.

A further $50bn a year would be needed for downstream services, such as storage and processing facilities.

Most of this investment would have to come from private investors: farmers buying seeds, fertilisers and machinery and businesses investing in processing facilities.

On top of this, public investments were needed in agriculture research and development, in big infrastructure projects such as building roads, ports, storage and irrigation systems.

Much-needed official development assistance to agriculture plunged 58 percent in real terms from 1980 to 2005, dropping from a 17 percent share of total aid to 3.8 percent over the period. It now stood at about 5 percent, it said.

Leaders of rich nations at the G8 meeting in July plegded $20bn over three years to boost agricultural investment in poorer countries and fight hunger, and the Group of 20 last month asked the World Bank to set up a trust fund to boost agricultural support to low-income countries.

Up to $29bn of the $83bn projected annual net investments in agriculture would need to be spent in India and China, the countries with the largest populations. Sub-Saharan Africa would need about $11bn, Latin America and the Caribbean region would require some $20bn, the Middle East and north Africa $10bn, south Asia $20bn and east Asia $24bn, it said.

With scarce funds in many developing countries, foreign direct investment in agriculture there could make a significant contribution to bridging the investment gap.

But so-called "land grab" investments by rich nations in countries that are poor or lacking in food security have raised political and economic concerns, because they are often meant to export output to the investing countries.

Such deals should be designed in such a way as to boost benefits to host populations.