2024 World Bank Group Annual Meetings
WASHINGTON, USA – For decades, we’ve spoken about the potential of agribusiness and the role agriculture plays in shaping the future of food security, nutrition, growth and employment.
We’ve examined the challenges from every angle – how to increase food production, boost productivity, and resolve issues around water scarcity, fertilizers, infrastructure, and financing.
These challenges have often been roadblocks to realizing the full potential of this industry. But something is different now. Four key shifts are emerging that make this the right moment for a new strategic approach for the World Bank Group:
First, agriculture is increasingly vulnerable to climate risks and a significant contributor to emissions – yet it only receives 4 percent of climate finance globally. There is an opportunity to tap into these resources to advance climate-smart agriculture, which would grow productivity while reducing emissions.
Second, new tools for derisking are opening doors for private capital to flow into the agricultural sector. We’ve seen credit guarantees, first-loss facilities, and insurance instruments help make lending safe and more commercially viable. These financial tools, when paired with public sector policy and regulatory reforms, can create a favorable environment for private investors.
Third, in the past, reaching individual farmers has been difficult for fintechs or commercial banks. Advancements in digitalization and new digital tools have created opportunities to aggregate farmers and connect them with buyers, financial services, and innovative technologies that enhance productivity. Additionally, these tools create a “digital footprint,” helping farmers establish credit histories and dramatically reduce the cost of delivering financial services by up to 90 percent.
Fourth, a significant portion of agribusiness financing is sourced from large food companies and traders, who often operate in isolation. This approach can create inefficiencies and fragmentation, leaving smaller farmers out. However, we have found that with farmer associations and producer organizations we can move beyond the challenges of the past.
These four emerging shifts have the potential to fundamentally reshape the agribusiness landscape. They arrive at a time of extraordinary opportunity as global food demand is set to increase by 50 to 60 percent in the coming decades.
Taking advantage of this opportunity will not happen without a new approach. For us, that change begins today with the goal to create a comprehensive ecosystem for agribusiness.
This strategic pivot is made possible because of the work we have done over the past 16 months to become a better, simpler, more coordinated institution. It moves us beyond fragmented efforts to a constellation of solutions that includes everything from warehousing to logistics to production, but with smallholder farmers and producer organizations at the center.
We are combining a new way of working with a new level of investment – doubling our agri-finance and agribusiness commitments to $9 billion annually by 2030.
With IBRD and IDA’s experience building capacity and services of the public sector; and IFC and MIGA’s financing and private sector access. We hope to make changes that will be seen and felt by business and government partners alike – with a goal to increase mobilization to $5 billion in 2030.
For example…
Our public sector arms can help countries develop regulations and standards, like those that ensure products comply with export market requirements. They can advise on land tenure solutions or develop national irrigation networks. In the area of climate finance, they can help governments repurpose some of the $1.25 trillion of fossil fuel, agriculture, and fishery subsidies to incentivize greener practices, unlocking a significant source of financing for the agricultural sector.
While our private sector teams can focus on everything from debt and equity funding to mitigating risk with guarantees. The latter has been a challenge because producers haven’t always been able to access our fragmented derisking instruments. We are now moving towards an integrated approach, bringing these resources together to offer comprehensive support. The new, simplified World Bank Group Guarantee Platform is a key step in this transformation, making it easier to deliver tailored solutions that meet the diverse demands of our partners.
But, where we see the greatest potential is by integrating the link between our public sector work and our private sector support to help smallholder farmers connect into the supply chains. IBRD has expertise in working closely with smallholder and producer organizations to improve their productivity and climate resilience, making them viable suppliers that can meet the scale, consistency, and high standards that larger companies need. Once established, IFC will step in not only to provide financing for equipment, but also to connect these cooperatives with companies seeking reliable sources of production.
The key bottlenecks to be addressed will differ across countries, value chain to value chain. We cannot predetermine these interventions universally. But with a World Bank Group ecosystem approach, we will be able to identify and address any number of barriers to build opportunity.
The effort to transform agribusiness is not only about securing the food systems of tomorrow, it is fundamentally a jobs initiative. In the next ten years, 1.2 billion young people in developing countries will enter the workforce. Yet, only 420 million jobs are projected to be available, leaving nearly 800 million without a clear path to employment.
We face two paths: one where this generation powers our future; or one where they challenge our future – due to migration, social unrest, and despondency driven by unemployment.
Our strategic shift in agribusiness is aimed at unlocking the path to a brighter future – delivering quality of life and job opportunities.
Quality of life improves as agricultural productivity increases. Climate-smart production practices mean fewer emissions and cleaner air. Higher incomes lead to investments in freshwater infrastructure. Diets improve, children grow up healthier, and are better able to make the most of their education. Healthier communities are more resilient.
For young people, the rise of a thriving agriculture industry brings the promise of a better life. With more jobs in rural areas and higher incomes, they no longer face the same limitations as previous generations. They have the opportunity to pursue fulfilling careers, whether in agriculture with their families or to pursue a new generation of job, which would require skilling and education of a different type. The chance for a brighter future becomes more attainable, creating a cycle of prosperity and progress.
We stand at a crossroads, and the path we choose today will determine the future. By transforming agriculture and agribusiness, we can create the food system of tomorrow, raise living standards, and create jobs.
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