Public investment is not enough: to eradicate hunger we need partnerships with the private sector
09 May 2016
How do you see EU support to private sector engagement in agriculture?
The agricultural sector in less developed countries has suffered from serious underinvestment for decades. The investment needed to eradicate hunger by 2030 is estimated by FAO at $267 billion per year of which US$105 billion for rural development and agriculture.
In less developed countries 70% of the total population lives in rural areas, and this pattern is not expected to change substantially by 2030. Agriculture plays a crucial role in all less developed countries economies, accounting for 60% of total employment and 25% of GDP (Gross Domestic Product) in average.
Private sector has a key role to play in the development of agriculture; public investment will not reach the US$105 billion I just mentioned. The EU must therefore partner with Private and base its partnership on principles of responsible business conduct and globally agreed principles like the Voluntary Guidelines on the Responsible Governance of Tenure (VGGT).
What are your views on increasing agricultural finance and investment for growth, jobs and stability?
EU support to agricultural investments will be governed by a set of guiding principles, as reflected in the Commission Communication on the private sector, in particular “Additionality” is a must. The Agriculture Financing Initiative AgriFI is the operational translation of this vision. Partnerships with private sector will create inclusive and sustainable rural growth, through better access to market for smallholders and generation of more added value on value chains.
How will this initiative work?
AgriFI relies on 3 pillars: Investment, Business Development and Advisory Services, Value Chain Analysis for better accountability and decision making. AgriFI is implemented within the EU blending framework and is complemented by grants through Call for Proposals. It can provide risk capital, guarantees or other risk-sharing mechanisms and grants.
At this stage we launched a call for proposal in February and we received more than 500 proposals from partnerships between NGOs, farmers organisations and private sector companies (for an amount exceeding 2 billion EUR). Under the blending facilities, projects involving private sector and aiming at improving agriculture based value chains are already in the pipe line proposed by eligible financial institutions.
The value chain analysis capacity relying on the expertise of European research and knowledge centres will be soon fully available. Finally I would like to underline that European partners and in particular SMEs have lots of experience in responsible business conduct, capacity development, that will be key partners for AgriFI.