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The State of Food and Agriculture 2012

Investing in Agriculture for a Better Future

image of The State of Food and Agriculture 2012

This edition of The State of Food and Agriculture shows that farmers are the largest investors in developing country agriculture and argues, therefore, that farmers and their investment decisions must be central to any strategy aimed at improving agricultural investment. The report also presents evidence showing how public resources can be used more effectively to catalyse private investment, especially by farmers themselves, and to channel public and private resources towards more socially beneficial outcomes. The focus of this report is on the accumulation of capital by farmers in agriculture and the investments made by governments to facilitate this accumulation.

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Fostering farmers’ investment in agriculture

Most investment in agriculture is made on the half a billion farms located around the world. On-farm agricultural investment decisions are based on the potential profitability and risks compared with other investment opportunities and the individual constraints they face. In any country, the relative returns, risks and constraints associated with agricultural investment are affected by the overall investment climate, policies specific to agriculture and the provision of public goods that are essential for agriculture. Governments of countries that are dependent on agriculture for a large share of employment and GDP have a responsibility to provide an investment climate that is conducive to investment in the sector. Ensuring that agriculture is not penalized relative to other sectors is a basic element of this. Along with the need to foster investment in agriculture, governments have a responsibility to ensure that such investment is environmentally sustainable.

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