The global agriculture and food system is in desperate need of transformation, and the good news is that there’s no shortage of money to make it happen. With food insecurity on the rise and enormous hidden costs, estimated to be around $12 trillion per year, it’s clear that the current system isn’t cutting it anymore.
The challenges facing the global agrifood system are immense. Climate change and the need to produce food for two billion additional people by 2050 while striving for net-zero emissions are just a few of them. To achieve this, an estimated $500 billion per year over the next 10 years will be required to revolutionize the agrifood system to make it more resilient, nutritious, inclusive, and net-zero. But the good news is that there are financing sources already available that can be harnessed to achieve this transformation.
One of the potential sources of funds is by reallocating public support. Currently, about $650 billion per year is provided in public support to the global agriculture and food system. However, a rethinking of this support could lead to better nutritional and environmental outcomes. This has been highlighted in the UAE Declaration of Sustainable Agriculture, Resilient Food Systems and Climate Action, supported by 159 heads of state and government, which emphasizes the need to revisit policies and public support related to agriculture and food systems.
Another area of opportunity is in improving the quality of private sector investments. With an estimated $2 trillion per year spent by the private sector on agriculture and food, there’s potential for significant impact. However, while there are good intentions, there is little visible progress on the ground. Establishing effective public-private-partnerships is crucial to improve the quality of private sector financing in the agrifood space.
Scaling-up climate financing is also essential. The global agrifood system receives only about 4% of total global project-level climate financing, estimated at $660 billion per year. Given the significant impact of the agrifood system on global greenhouse gas emissions, there is a strong case for scaling up climate financing to the sector. This would acknowledge the contribution of farmers, especially smallholders, in providing global public goods and help them transition to more sustainable practices.
Fragmentation of official development assistance (ODA) financing is another area that needs attention. The fragmented nature of ODA financing to agriculture, totaling about $10 billion per year, is at odds with the holistic notion of agrifood systems. Shifting ODA financing towards sector-wide approaches using co-financing arrangements and output-based financing modalities could help address this issue.
Furthermore, tailored loss and damage financing needs to be considered, especially with the impacts of climate change already affecting agricultural productivity. There’s also an opportunity to rethink poverty lines by using nutrition-informed benchmarks for targeting and designing social protection programs, ultimately benefiting women and children who are most vulnerable to food and nutrition insecurity.
In addition, targeting debt relief can also contribute to financing the transformation of the agrifood system. Many food-insecure countries are heavily indebted, and debt-for-food security swaps could provide a much-needed lifeline. This could lead to improvements in food and nutrition security, ultimately reducing childhood stunting and promoting physical and cognitive development.
To make this transformation a reality, what is needed is the political will to make it happen. The endorsement of the UAE Declaration of Sustainable Agriculture, Resilient Food Systems and Climate Action is indeed a step in the right direction. Now, the onus is on stakeholders to fully implement it and unlock the funds needed to revolutionize the global agrifood system.
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