Soaring global food prices and rocketing demand for staples such as rice and wheat are putting pressure on farmers and other producers who are struggling to fill all the hungry mouths.
In a major address ahead of the 2008 IMF/World Bank spring meetings, World Bank President Robert Zoellick highlighted the issues of spiraling food prices, growing shortages and the threat of malnutrition. He called for a coordinated, global response.
IFC, which supports the increased role of private enterprise in creating jobs and reducing poverty, has an important part to play in ensuring growing food demand does not outstrip supply.
IFC will scale up investment and advisory support to agribusiness operations in Africa and elsewhere, including working with the World Bank on land titling and productivity, local currency financing, working capital, distribution and logistics, and support for the intermediary services on which farmers rely.
An important goal for IFC is to commit approximately $100 million to the agribusiness sector in Sub-Saharan Africa by FY10, a dramatic increase over the average annual level achieved over the past decade.
AGRICULTURE’S ROLE
Besides its obvious role of putting food on plates, agriculture is a vital engine of economic development in many developing countries, contributing a major portion of GDP, employment, and foreign exchange earnings.
Agriculture's economic role is particularly important in Sub-Saharan Africa, where many countries have low per capita incomes. In Tanzania, for example, agriculture accounts for 45 percent of GDP and 65 percent of employment.
Together with other stakeholders, including colleagues at the World Bank, governments, and private sector participants, IFC will identify key subsectors within agribusiness that have a particularly strong potential for developmental impact.
The Corporation works with partners to create the necessary conditions to promote investments. This will include strengthening the business environment through administrative reforms while improving infrastructure, such as water reservoirs and storage facilities.
NUMEROUS CHALLENGES
Increasing the role of agribusiness in Africa’s economic development faces numerous challenges. In many sub-Saharan African countries, most crops are produced by small-sized farms with limited mechanization and capacity, leading to poor yields.
Fragmented markets, price controls, and poor infrastructure also hamper production, while the current pressure on natural resources such as land and water is too strong to be sustainable.
Many agricultural products produced in Africa, such as maize, rice, and palm oil, are not competitive globally or have low profit margins. This means that Sub-Saharan Africa is ill equipped to meet its food requirements, which are set to double in the next 30 years or even sooner.
To address these challenges, IFC supports projects across the food supply chain, including processing, logistics, and distribution. The goal is to support the development of an efficient and competitive private agribusiness sector. Achieving this will have a strong impact on reducing poverty and improving lives and also directly contribute to meeting global needs.
The World Bank – which estimates 33 countries could face social unrest because of higher food and energy prices -- and IFC are teaming up to address the deepening problem of food supply and production before it becomes a crisis.
"We need a new deal for global food policy,” Zoellick said. “This new deal should focus not only on hunger and malnutrition, access to food and its supply, but also the interconnections with energy, yields, climate change, investment, the marginalization of women and others, and economic resiliency and growth."
For More Information Contact:
Jason Hopps
Communications Officer
Johannesburg, South Africa
Jhopps@ifc.org
