Making more and better investments in agriculture is one of the most effective ways to reduce hunger and poverty while safeguarding the environment. This is the key message of FAO´s flagship annual report, The State of Food and Agriculture 2012 (SOFA).
"The world´s more than one billion farmers must be central to any agricultural investment strategy, as they are the biggest investors in this sector, the report notes. But farmers' investments are often limited by unfavourable investment climates... The report emphasizes that in many low- and middle-income countries, farmers are often confronted with weak incentives to invest.
A number of factors can drastically reduce the incentive to invest, including poor governance; absence of rule of law; high levels of corruption; insecure property rights; arbitrary trade practices; high "taxation" of agriculture relative to other sectors; and inadequate levels and quality of rural infrastructure and public services. Smallholders face specific, severe constraints, often including extreme poverty, weak property rights, and poor access to markets and financial services. Overcoming these barriers will be essential to unlock the full investment potential of farmers in many rural areas. The report recommends focusing on a number of areas in order to foster smallholder investment, including the following:
- Governments and their development partners need to help smallholders mobilize their own savings and gain improved access to credit.
- Stronger producer organizations, such as cooperatives, can help smallholders deal with risks and provide better market access.
- Social protection can contribute to the expansion of the asset base by the poorest smallholders.
Check out the full report.