Bloomberg News

Hunger Seen by FAO Linked to Decades of Falling Farm Investment

December 06, 2012

South Asia and sub-Saharan Africa, the world’s regions where hunger and extreme poverty are most widespread, have faced stagnant or falling farm spending in the past three decades, the United Nations said.

Ridding the regions of hunger will require a substantial rise in farm investment and a “dramatic” improvement in the level and quality of government spending on agriculture, the UN’s Food & Agriculture Organization wrote in a report today.

The world had about 868 million hungry people in the 2010-12 period, the Rome-based UN agency wrote in October, a figure FAO Director-General Jose Graziano da Silva said is “unacceptable.” High food costs last year contributed to civil unrest across the Middle East and North Africa.

“Investing in agriculture is one of the most effective strategies for reducing poverty and hunger,” the FAO wrote. “The regions where agricultural capital per worker and public agricultural spending per worker have stagnated or fallen during the past three decades are also the epicenters of poverty and hunger in the world.”

Farmers in low- and middle-income countries on average invest more than four times as much in capital on their own farms than what their governments invest in agriculture, according to the FAO. Expenditure by farmers ‘dwarfs’’ that of international donors and private foreign investors, it said.

Investment Incentives

If governments don’t create a favorable climate, farmers will not adequately invest, the UN agency said. High levels of corruption, insecure property rights, arbitrary trade rules and taxation of farming relative to other industries all “drastically” reduce investment incentives for farmers.

Governments and donors should focus their limited funds on providing essential public good with high economic and social returns, the FAO wrote.

“Some types of spending are clearly better than others,” the FAO said. “Productivity-enhancing agricultural research, rural roads and education have consistently higher payoffs for society than spending on fertilizer subsidies, for example.”

Fertilizer subsidies often go to rural elites and can undermine private input suppliers, according to the FAO. While they may be politically popular, such measures are usually not the best use of public funds, the agency said.

Agricultural Research

The return on agricultural research and development spending in China and India as measured by increased farm output has outstripped that of roads, education, irrigation and electricity, according to the report.

The working population employed in agriculture was 1.31 billion people in 2010, up from 1.24 billion a decade earlier and 1.15 billion in 1990, FAO statistics show. As a share of the economically active population, agriculture dropped to 40 percent in 2010 from 44 percent in 2000 and 48 percent in 1990.

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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