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June 18th, 2018

Agricultural investment funds for development

Published by FAO,

This report (PDF) by FAO explores agricultural investment funds as a vehicle for financing agricultural businesses and projects. Investment is essential for the growth of the agricultural sector. The major sources of capital need to come from private investors, since public investment cannot meet the needs. Public investment can however be effective in stimulating and leveraging private investment in the sector. Private sector investment funds are expected to increasingly benefit from investments in the agricultural sector because demand for food and other agricultural products is expected to continue to increase. Agricultural investment funds, which help mitigate investment risks, increasingly contribute to the agricultural investment growth, as manifested by the proliferation of funds set up to target the agricultural sector. The funds analysed show similarities in some of their structures and management processes. Most investments occur in agribusiness further downstream along the value chain, where investment, expertise and market linkages of investors can have an optimum effect. Analysis shows that agricultural investment funds can play a strong role in fostering agricultural development in developing countries, contributing to growth, productivity increases, poverty reduction and, hence, sustainable development. Most private and public funds were able to invest their resources well. Investment funds offered the possibility to create a common portfolio of investments in agriculture to achieve both financial returns and development impact. Public-private partnerships can be a valuable tool to increase access to finance for the agricultural sector due to its specific characteristics and risk. public capital can play an important role to attract private investors who otherwise might not be willing to risk investment in agriculture. Governments and international donors in agricultural investment funds should carefully consider how to best stimulate investments.

Curated from fao.org